Endogenous Growth and Stochastic Trends
Journal of Monetary Economics
Posted: 19 Sep 1998
A common question in the literature on economic fluctuations is whether business cycles are all alike. Among industrial economies, one of the most analyzed characteristics of business cycles is the persistence of output fluctuations. By persistent fluctuations we mean output fluctuations that are long lasting. This paper shows that, although all OECD countries display persistent fluctuations, there are large cross-country differences in the degree of persistence. A key finding of the paper is that these differences are strongly correlated to differences in the long-term growth rate of GNP. Countries that display a large average GNP growth rate in the last 35 years also present a high degree of short-term persistence. Based on this finding, we propose an explanation to the differences in persistence which has far-reaching implications for the interactions between fluctuations and growth and for the concept of persistence itself.
Note: This is a description of the paper and not the actual abstract.
JEL Classification: C22, E32, O40
Suggested Citation: Suggested Citation