On the link between volatility and growth

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On the link between volatility and growth. / Posch, Olaf; Wälde, K.

In: Journal of Economic Growth, Vol. 16, No. 4, 2011, p. 285-308.

Research output: Contribution to journal/Conference contribution in journal/Contribution to newspaper › Journal article › Research › peer-review

Vancouver

Posch O, Wälde K. On the link between volatility and growth. Journal of Economic Growth. 2011;16(4):285-308. doi: 10.1007/s10887-011-9069-y

Author

Posch, Olaf ; Wälde, K. / On the link between volatility and growth. In: Journal of Economic Growth. 2011 ; Vol. 16, No. 4. pp. 285-308.

Bibtex

@article{471d15b182d44a6e95658795eeb2a83b,

title = "On the link between volatility and growth",

abstract = "A model of growth with endogenous innovation and distortionary taxes is presented. Since innovation is the only source of volatility, any variable that influences innovation directly affects volatility and growth. This joint endogeneity is illustrated by working out the effects through which economies with different tax levels differ in their volatility and growth process. We obtain analytical measures of macro volatility based on cyclical output and on output growth rates for plausible parametric restrictions. This analysis implies that controls for taxes should be included in the standard growth-volatility regressions. Our estimates show that the conventional Ramey-Ramey coefficient is affected sizeably. In addition, tax levels do indeed appear to affect volatility in our empirical application.",

author = "Olaf Posch and K. W{\"a}lde",

year = "2011",

doi = "10.1007/s10887-011-9069-y",

language = "English",

volume = "16",

pages = "285--308",

journal = "Journal of Economic Growth",

issn = "1381-4338",

publisher = "Springer",

number = "4",

}

RIS

TY - JOUR

T1 - On the link between volatility and growth

AU - Posch, Olaf

AU - Wälde, K.

PY - 2011

Y1 - 2011

N2 - A model of growth with endogenous innovation and distortionary taxes is presented. Since innovation is the only source of volatility, any variable that influences innovation directly affects volatility and growth. This joint endogeneity is illustrated by working out the effects through which economies with different tax levels differ in their volatility and growth process. We obtain analytical measures of macro volatility based on cyclical output and on output growth rates for plausible parametric restrictions. This analysis implies that controls for taxes should be included in the standard growth-volatility regressions. Our estimates show that the conventional Ramey-Ramey coefficient is affected sizeably. In addition, tax levels do indeed appear to affect volatility in our empirical application.

AB - A model of growth with endogenous innovation and distortionary taxes is presented. Since innovation is the only source of volatility, any variable that influences innovation directly affects volatility and growth. This joint endogeneity is illustrated by working out the effects through which economies with different tax levels differ in their volatility and growth process. We obtain analytical measures of macro volatility based on cyclical output and on output growth rates for plausible parametric restrictions. This analysis implies that controls for taxes should be included in the standard growth-volatility regressions. Our estimates show that the conventional Ramey-Ramey coefficient is affected sizeably. In addition, tax levels do indeed appear to affect volatility in our empirical application.

UR - http://www.scopus.com/inward/record.url?scp=80855132783&partnerID=8YFLogxK

U2 - 10.1007/s10887-011-9069-y

DO - 10.1007/s10887-011-9069-y

M3 - Journal article

AN - SCOPUS:80855132783

VL - 16

SP - 285

EP - 308

JO - Journal of Economic Growth

JF - Journal of Economic Growth

SN - 1381-4338

IS - 4

ER -

Department of Economics and Business Economics