Normal view MARC view

Endogenous growth and stochastic trends

Author: Fatás, Antonio INSEAD Area: Economics and Political Science Series: Working Paper ; 95/85/EPS Publisher: Fontainebleau : INSEAD, 1995.Language: EnglishDescription: 21 p.Type of document: INSEAD Working Paper Online Access: Click here Abstract: This paper shows that there exists a strong positive correlation between long-term growth rates and the persistence of output fluctuations in a cross section of countries. We argue that the traditional explanation of persistence, an RBC model with exogenous productivity shocks, cannot produce this correlation. We propose an explanation based on an endogenous growth model with exogenous cyclical shocks. We find that, despite the cyclical nature of the shocks, output fluctuations are persistent and the degree of persistence is an increasing function of long-term growth rates. Growth dynamics become an important component of the transmission of business cycles. We conclude that the analysis of economic fluctuations in models where technological progress is assumed to be exogenous can be misleading
Tags: No tags from this library for this title. Add tag(s)
Log in to add tags.
Item type Current location Collection Call number Status Date due
INSEAD Working Paper Digital Library
PDF Available

This paper shows that there exists a strong positive correlation between long-term growth rates and the persistence of output fluctuations in a cross section of countries. We argue that the traditional explanation of persistence, an RBC model with exogenous productivity shocks, cannot produce this correlation. We propose an explanation based on an endogenous growth model with exogenous cyclical shocks. We find that, despite the cyclical nature of the shocks, output fluctuations are persistent and the degree of persistence is an increasing function of long-term growth rates. Growth dynamics become an important component of the transmission of business cycles. We conclude that the analysis of economic fluctuations in models where technological progress is assumed to be exogenous can be misleading

Digitized

There are no comments for this item.

Log in to your account to post a comment.
Koha 3.18 - INSEAD Library Catalogue
Library Home | Contact Us | What's Koha?