Cross-Country Evidence on the Link Between Volatility and Growth

Garey Ramey and Valerie Ramey

No 4959, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper presents empirical evidence against the standard dichotomy in macroeconomics that separates growth from the volatility of economic fluctuations. In a sample of 92 countries as well as a sample of OECD countries, we find that countries with higher volatility have lower growth. The addition of standard control variables strengthens the negative relationship. We also find that government spending-induced volatility is negatively associated with growth even after controlling for both time- and country-fixed effects.

JEL-codes: C42 E32 (search for similar items in EconPapers)
Date: 1994-12
Note: EFG IFM EFG
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Citations: View citations in EconPapers (72)

Published as American Economic Review, 85 (December 1995): 1138-1151

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Journal Article: Cross-Country Evidence on the Link between Volatility and Growth (1995)
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