 Output Volatility in Emerging Market and Developing Countries: What Explains the “Great Moderation” of 1970-2003?Czech Journal of Economics and Finance (Finance a uver), 2009, vol. 59, issue 3, 229-254 Abstract: Output volatility and the size of output drops have declined across groups of nontransition countries studied in this paper over the past three decades, but have remained considerably higher in developing countries than in industrial countries. The paper employs a Bayesian latent dynamic factor model to decompose output growth into global, regional, and country-specific components. The favorable trends in output volatility and large output drops in developing countries are found to have resulted from lower country-specific volatility and more benign country-specific events. Evidence from cross-section regressions over the 1970–2003 period suggests that the volatility of discretionary fiscal spending and terms of trade volatility together with exchange rate flexibility were key determinants of volatility and large output drops. Keywords: output volatility; output drops; fiscal policy; exchange rate policy; developing countries (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:fau:fauart:v:59:y:2009:i:3:p:229-255 Access Statistics for this article More articles in Czech Journal of Economics and Finance (Finance a uver) from Charles University Prague, Faculty of Social Sciences Contact information at EDIRC. |
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