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Uncertainty and growth: evidence of emerging and developed countries

Author

Listed:
  • Angelo Salton

    (Federal University of Viçosa)

  • Regis A. Ely

    (Federal University of Pelotas)

Abstract

This letter aims to investigate the relationship between uncertainty and economic growth in economies with different stages of development. We use monthly data on industrial production during the period of 1961 to 2014 from OECD's Main Economic Indicators database. We estimate the relationship between industrial production growth and its volatility from 14 countries using EGARCH in mean and panel GARCH in mean models. Our results suggest that the correlation between economic growth and its own volatility is positive in developed countries but ambiguous in emerging economies. This facts support both theories of precautionary savings, in the case of developed countries, and irreversible investments, in the case of some emerging economies.

Suggested Citation

  • Angelo Salton & Regis A. Ely, 2017. "Uncertainty and growth: evidence of emerging and developed countries," Economics Bulletin, AccessEcon, vol. 37(2), pages 1274-1280.
    • Handle: RePEc:ebl:ecbull:eb-16-00684
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    References listed on IDEAS

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    More about this item

    Keywords

    Uncertainty; economic growth; volatility; development;
    All these keywords.

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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