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Empirical evidence on growth and business cycles

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  • Martin Zagler

    (UPO University of Eastern Piedmont
    WU Vienna University of Economics and Business)

Abstract

This paper empirically investigates the relationship between long-run economic growth and output volatility for the time series experience of 25 OECD countries between the years 1960 and 2013. Given the low number of observations, we reject, based on Monte Carlo simulations, the obvious choice of Garch estimation, and instead propose a pooled OLS estimator between a filtered GDP series that eliminates the cyclicality and the fluctuations around this trend. We find strong empirical evidence for a positive relationship between output variability and economic growth. This relationship seems to confirm theoretical literature which proposes such a positive relation.

Suggested Citation

  • Martin Zagler, 2017. "Empirical evidence on growth and business cycles," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 44(3), pages 547-566, August.
    • Handle: RePEc:kap:empiri:v:44:y:2017:i:3:d:10.1007_s10663-016-9336-4
    DOI: 10.1007/s10663-016-9336-4
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    Cited by:

    1. Lin Guo & Dongliang Zhang, 2019. "EC-Structure: Establishing Consumption Structure through Mining E-Commerce Data to Discover Consumption Upgrade," Complexity, Hindawi, vol. 2019, pages 1-8, March.

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    More about this item

    Keywords

    Growth; Volatility; Cycles;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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