Cross-Country Evidence on the Link between Volatility and Growth

  title={Cross-Country Evidence on the Link between Volatility and Growth},
  author={Garey Ramey and Valerie A. Ramey},
  journal={NBER Working Paper Series},
This paper presents empirical evidence against the standard dichotomy in macroeconomics that separates growth from the volatility of economic fluctuations. In a sample of 92 countries as well as a sample of OECD countries, we find that countries with higher volatility have lower growth. The addition of standard control variables strengthens the negative relationship. We also find that government spending-induced volatility is negatively associated with growth even after controlling for both… Expand
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