Journal
JOURNAL OF MONETARY ECONOMICS
Volume 54, Issue 7, Pages 1848-1862Publisher
ELSEVIER SCIENCE BV
DOI: 10.1016/j.jmoneco.2006.08.001
Keywords
sectors; growth; volatility
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Growth and volatility correlate negatively across countries, but positively across sectors. Analytically, whether or not sectoral growth and volatility are correlated positively is irrelevant in the aggregate. Cross-country estimates identify the detrimental effects of macroeconomic volatility on growth, but they cannot be used to dismiss theories implying a positive growth-volatility coefficient, which appear to hold in sectoral data. In particular, volatile sectors command high investment rates, as they would in a mean variance framework. (c) 2006 Elsevier B.V. All rights reserved.
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