Macroeconomic Stability and the Distribution of Growth Rates

Posted: 8 Dec 2009

See all articles by Vatcharin Sirimaneetham

Vatcharin Sirimaneetham

University of Bristol - Department of Economics

Jonathan R.W. Temple

Centre for Economic Policy Research (CEPR)

Date Written: 2009

Abstract

It is often argued that macroeconomic instability can form a binding constraint on economic growth. Drawing on a new index of stability, threshold estimation is used to divide developing economies into two growth regimes, depending on a threshold level of stability. For the more stable group of countries, the output benefits of investment are greater, conditional convergence is faster, and measures of institutional quality have more explanatory power, suggesting that instability forms a binding constraint for the less stable group. Macroeconomic stability is also shown to dominate several other candidates for identifying distinct growth regimes.

Keywords: O23, O40

Suggested Citation

Sirimaneetham, Vatcharin and Temple, Jonathan R.W., Macroeconomic Stability and the Distribution of Growth Rates (2009). The World Bank Economic Review, Vol. 23, Issue 3, pp. 443-479, 2009. Available at SSRN: https://ssrn.com/abstract=1519736 or http://dx.doi.org/lhp008

Vatcharin Sirimaneetham (Contact Author)

University of Bristol - Department of Economics ( email )

8 Woodland Road
Bristol BS8 ITN
United Kingdom

Jonathan R.W. Temple

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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