The Deep Historical Roots of Macroeconomic Volatility

46 Pages Posted: 10 Apr 2016

See all articles by Sam Hak Kan Tang

Sam Hak Kan Tang

University of Western Australia

Charles Ka Yui Leung

The Chinese University of Hong Kong (CUHK) - Department of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: April 2016

Abstract

We present cross-country evidence that a country’s macroeconomic volatility, measured either by the standard deviation of output growth or the occurrence of trend-growth breaks, is significantly affected by the country’s historical variables. In particular, countries with longer histories of state-level political institutions experience less macroeconomic volatility in post-war periods. Robustness checks reveal that the effect of this historical variable on volatility remains significant and substantial after controlling for a host of structural variables investigated in previous studies. We also find that the state history variable is more important in countries with a higher level of macroeconomic volatility.

Keywords: Macroeconomic volatility, history of State-level institution, History of agriculture, Technology adoption, Political stability

JEL Classification: O10, O33, O43

Suggested Citation

Tang, Sam Hak Kan and Leung, Ka Yui Charles, The Deep Historical Roots of Macroeconomic Volatility (April 2016). ISER Discussion Paper No. 967. Available at SSRN: https://ssrn.com/abstract=2760151 or http://dx.doi.org/10.2139/ssrn.2760151

Sam Hak Kan Tang

University of Western Australia ( email )

Nedlands, Western Australia 6907
Australia

Ka Yui Charles Leung (Contact Author)

The Chinese University of Hong Kong (CUHK) - Department of Economics ( email )

Shatin, N.T.
Hong Kong
+852-2609-7158 (Phone)
+852-2603-5805 (Fax)

HOME PAGE: http://www.cuhk.edu.hk/eco/staff/kyleung

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