Growth Volatility and the Structure of the Economy

Andrea Mario Lavezzi, Davide Fiaschi

Research output: Chapter in Book/Report/Conference proceedingChapter

3 Citations (Scopus)

Abstract

The aim of the chapter is twofold: (i) to propose a methodology to compute the growth rate volatility of an economy and (ii) to investigate the relationship between growth volatility and economic development throughthe lenses of the structural characteristics of an economy. We study a large cross-section of countries in the period 1970–2009, controlling for the stability of the estimates in two subperiods: 1970:1989 (Period I) and 1990:2009 (Period II). Our main findings are (i) the degree of tradeopenness has a destabilizing effect, while the degree of financial openness has not a significant effect; (ii) the size of the public sector displays a U-shaped relationship with growth volatility, but only in Period II; and (iii) the level of financial development has a negative effect on growth volatility, but only in Period I. Therefore, the dominant policy orientationsin the recent decades contained emphasis on potential sources of instability, for example, on the increase in openness and on the reduction of the size of the public sector.
Original languageEnglish
Title of host publicationEconomic Growth and Development
Pages203-245
Number of pages43
Publication statusPublished - 2011

Publication series

NameFrontiers of Economics and Globalization

All Science Journal Classification (ASJC) codes

  • General Economics,Econometrics and Finance

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