Growth and Volatility

26 Pages Posted: 20 Jun 2006

See all articles by Jean M. Imbs

Jean M. Imbs

Paris School of Economics (PSE); NYU Abu Dhabi; Centre for Economic Policy Research (CEPR)

Date Written: April 2006

Abstract

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.

Keywords: Sectors, Growth, Volatility

JEL Classification: E32, O40

Suggested Citation

Imbs, Jean M. and Imbs, Jean M., Growth and Volatility (April 2006). Swiss Finance Institute Research Paper No. 06-9, Available at SSRN: https://ssrn.com/abstract=910206 or http://dx.doi.org/10.2139/ssrn.910206

Jean M. Imbs (Contact Author)

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

NYU Abu Dhabi ( email )

PO Box 129188
Abu Dhabi
United Arab Emirates

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom