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Volatility and growth: A not so straightforward relationship

Research output: Contribution to journalArticle

Dimitrios Bakas, Georgios Chortareas, Georgios Magkonis

Original languageEnglish
Pages (from-to)874-907
Number of pages34
JournalOxford Economic Papers
Volume71
Issue number4
DOIs
Publication statusPublished - 1 Oct 2019

King's Authors

Abstract

Conflicting theoretical models and diverse empirical evidence characterize research analysing the relationship between business cycle volatility and economic growth. While the average reported effect of volatility on growth is negative, the empirical estimates vary substantially across studies. We identify the factors that explain this heterogeneity in estimates by conducting a meta-analysis. Our evidence suggests that researchers' choices regarding the measure of volatility, the control set of the estimated equation, the estimation methods, and the data characteristics can all explain the differences in the reported estimates. Finally, the literature is found to be free of publication bias.

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