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Growth and Output Fluctuations

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  • Chol‐Won Li

Abstract

This paper sheds new light on the interaction between growth and output fluctuations. Our approach is different from the literature in that we analyse how endogenous fluctuations are affected by a faster productivity growth in the long run. Main results: (i) expansion (or contraction) occurs more (or less) frequently, (ii) expansion becomes milder but contraction severer, (iii) the amplitude of fluctuations becomes larger, (iv) the variance of output changes ambiguously, indicating a non‐monotonic relationship. We also investigate how an R&D subsidy alters the nature of output fluctuations and re‐examine its effect on technological change in the presence of recurrent cycles. The result questions the widely‐accepted theoretical implication that a research subsidy unambiguously promotes technological progress.

Suggested Citation

  • Chol‐Won Li, 2000. "Growth and Output Fluctuations," Scottish Journal of Political Economy, Scottish Economic Society, vol. 47(2), pages 95-113, May.
    • Handle: RePEc:bla:scotjp:v:47:y:2000:i:2:p:95-113
    DOI: 10.1111/1467-9485.00155
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    Cited by:

    1. Patricia CRIFO-TILLET & Etienne LEHMANN, 2001. "Why the Kuznets Curve will always Reverse ?," LIDAM Discussion Papers IRES 2001036, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    2. Patricia Crifo-Tillet & Etienne Lehmann, 2004. "Why Will Technical Change Not Be Permanently Skill-Biased?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(1), pages 157-180, January.

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    More about this item

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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