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Volatility and Growth: A not so Straightforward Relationship

Dimitrios Bakas (), Georgios Chortareas and Georgios Magkonis ()

No 2018-04, Working Papers in Economics & Finance from University of Portsmouth, Portsmouth Business School, Economics and Finance Subject Group

Abstract: Conflicting theoretical approaches and diverse empirical evidence exist on the relationship between business cycle volatility and economic growth. While the average reported effect of volatility on growth is negative, the empirical estimates vary substantially across studies. We identify the factors that explain this heterogeneity of the estimates by conducting a meta†analysis. Our evidence suggests that researchers' choices regarding the measure of volatility, the control set of the estimated equation, the estimation methods, and the data characteristics can explain the differences in the reported estimates. Finally, the literature is found to be free of publication bias.

Keywords: Economic Growth; Volatility; Meta†Analysis; Bayesian Model Averaging; Ordered Probit Model (search for similar items in EconPapers)
JEL-codes: C83 E32 O40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: 2018-08-12
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Working Paper: Volatility and Growth: A not so straightforward relationship (2017) Downloads
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