The Deep Historical Roots of Macroeconomic Volatility

Sam Tang and Charles Leung
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Sam Tang: Business School, University of Western Australia

No 14-31, Economics Discussion / Working Papers from The University of Western Australia, Department of Economics

Abstract: We present cross-country evidence that a country’s macroeconomic volatility, measured either by the standard deviation of output growth or the occurrence of trend-growth breaks, is significantly affected by the country’s historical variables. In particular, countries with longer histories of state-level political institutions experience less macroeconomic volatility in post-war periods. In addition, we show that political instability, discretionary fiscal policy, financial underdevelopment, and a lack of foreign direct investment are the main mechanisms by which state history affects the macroeconomic volatility of modern states.

Pages: 58 pages
Date: 2014
New Economics Papers: this item is included in nep-gro, nep-his and nep-mac
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https://ecompapers.biz.uwa.edu.au/paper/PDF%20of%2 ... mic%20Volatility.pdf

Related works:
Journal Article: The Deep Historical Roots of Macroeconomic Volatility (2016)
Working Paper: The Deep Historical Roots of Macroeconomic Volatility (2016)
Working Paper: The deep historical roots of macroeconomic volatility (2016)
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