Publication Type
Working Paper
Version
publishedVersion
Publication Date
6-2002
Abstract
This paper has two objectives. First, to establish empirically a U-shaped relation between GDP growth rate and income volatility. The backward as well as the fast-growing countries have had extensive volatility; but developed nations by contrast have enjoyed much more stable income. Second, to present a macroeconomic model to study how growth and volatility evolve together. The twin endogenous variables are financial liberalization interacting with liquidity constraints. Opening LDC financial markets could raise or lower their long-term income and growth rates, depending on the severity of existing liquidity constraints. Financial liberalization and removing financial market imperfections unambiguously worsen income volatility.
Discipline
Growth and Development | Macroeconomics
Research Areas
Macroeconomics
Volume
05-2002
First Page
1
Last Page
32
Publisher
SMU Economics and Statistics Working Paper Series, No. 05-2002
City or Country
Singapore
Citation
LEUNG, Hing-Man.
Growth and Volatility. (2002). 05-2002, 1-32.
Available at: https://ink.library.smu.edu.sg/soe_research/695
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.