Is Economic Volatility Detrimental to Global Sustainability?

Yongfu Huang

The World Bank Economic Review, 2012, vol. 26, issue 1, 128-146

Abstract: In a dynamic panel data model allowing for error cross-section dependence, output volatility is found to impede sustainable development. Through a financial development channel (liquidity liability ratio), output volatility exerts a significant effect on depletion of natural resources, a key component of sustainability. Low-income countries, low energy-intensity countries, and low trade-share countries tend to be especially vulnerable to macroeconomic volatility and shocks. The findings highlight the interaction between global financial markets and the wider economy as a key factor influencing sustainable development, with important implications for macroeconomic and environmental policies in an integrated global green economy. Copyright 2012, Oxford University Press.

Date: 2012
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Working Paper: Is Economic Volatility Detrimental to Global Sustainability? (2010)
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