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Expecting the unexpected: economic growth under stress

Gloria Gonzalez-Rivera, Carlos Vladimir Rodríguez-Caballero () and Esther Ruiz
Additional contact information
Carlos Vladimir Rodríguez-Caballero: Mexico Autonomous Institute of Technology (ITAM) and CREATES, Postal: Río Hondo No.1, Col. Progreso, Tizapán, Álvaro Obregón, CDMX. 01080. México

Authors registered in the RePEc Author Service: Carlos Vladimir Rodriguez Caballero

CREATES Research Papers from Department of Economics and Business Economics, Aarhus University

Abstract: Large and unexpected moves in the factors underlying economic growth should be the main concern of policy makers aiming to strengthen the resilience of the economies. We propose measuring the effects of these extreme moves in the quantiles of the distribution of growth under stressed factors (GiS) and compare them with the popular Growth at Risk (GaR). In this comparison, we consider local and global macroeconomic and financial factors affecting US growth. We show that GaR underestimates the extreme and unexpected fall in growth produced by the COVID19 pandemic while GiS is much more accurate.

Keywords: Growth vulnerability; Multi-level factor model; Stressed growth (search for similar items in EconPapers)
JEL-codes: C32 C55 E32 E44 F44 F47 O41 (search for similar items in EconPapers)
Pages: 29
Date: 2021-03-15
New Economics Papers: this item is included in nep-cwa, nep-fdg, nep-mac and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Expecting the unexpected: economic growth under stress (2021) Downloads
Working Paper: Expecting the unexpected: economic growth under stress (2021) Downloads
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