Markov chains, eigenvalues and the stability of economic growth processes

In this paper, we analyze economic growth processes, using per capita growth series of 87 countries from 1961 to 2018 taken from the World Bank database, under the assumption that they followed Markov processes. We look for the regimes guiding those growth processes and define Markov chains according to which the time series switch from one regime to another. Our findings show that most of the growth processes are stable in the sense of remaining most of the time in a dominant regime. Hence, the main insight that can be obtained from our analysis is that growth processes can be better understood in terms of their idiosyncratic-dominant regimes.