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Revisiting the Volatility- Growth relationship: Some cross country evidence, 1978–2017

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  • Y N Raju
  • Debashis Acharya
  • Aviral Tiwari

Abstract

This paper attempts a re-examination of the relationship between the output volatility and economic growth using an annual data set for select 67 countries for the period 1978 to 2017 spanning over 40 years. Towards this objective cross section and panel, regressions are estimated for different country groups namely developing, industrial, high financially integrated (HFI) and low financially integrated (LFI) country groups. Overall, the results indicate that output volatility as a proxy of macroeconomic volatility has negative effect on economic growth. The results appear to be stronger when we include other control variables as part of an information set. The panel regression results support the negative relationship between economic growth and volatility for the developing countries. The financial development indicator indicates significant relation with growth for industrial economies.

Suggested Citation

  • Y N Raju & Debashis Acharya & Aviral Tiwari, 2020. "Revisiting the Volatility- Growth relationship: Some cross country evidence, 1978–2017," Cogent Economics & Finance, Taylor & Francis Journals, vol. 8(1), pages 1826655-182, January.
    • Handle: RePEc:taf:oaefxx:v:8:y:2020:i:1:p:1826655
    DOI: 10.1080/23322039.2020.1826655
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    Cited by:

    1. Gomez-Gonzalez, Jose E. & Uribe, Jorge M. & Valencia, Oscar M., 2023. "Does economic complexity reduce the probability of a fiscal crisis?," World Development, Elsevier, vol. 168(C).
    2. Ngomba Bodi, Francis Ghislain, 2022. "External constraint and procyclicality of monetary policy of the Bank of Central African States (BEAC)," MPRA Paper 116375, University Library of Munich, Germany.
    3. Kharitonchik Anatoly, 2024. "Optimal Monetary Policy Framework in an Emerging Market Economy under Sanctions Pressure and Restrictions on Capital Flows," Central European Economic Journal, Sciendo, vol. 11(58), pages 329-345.
    4. Abdulaziz H. Algaeed, 2022. "Government Spending Volatility and Real Economic Growth: Evidence From a Major Oil Producing Country, Saudi Arabia, 1970 to 2018," SAGE Open, , vol. 12(2), pages 21582440221, April.

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