The Deep Historical Roots of Macroeconomic Volatility

46 Pages Posted: 20 Apr 2016

See all articles by Sam Hak Kan Tang

Sam Hak Kan Tang

University of Western Australia

Charles K. Leung

City University of Hong Kong

Multiple version iconThere are 3 versions of this paper

Date Written: 2016-04-19


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.

Suggested Citation

Tang, Sam Hak Kan and Leung, Charles Ka Yui, The Deep Historical Roots of Macroeconomic Volatility (2016-04-19). Globalization and Monetary Policy Institute Working Paper No. 271, Available at SSRN: or

Sam Hak Kan Tang (Contact Author)

University of Western Australia ( email )

Nedlands, Western Australia 6907

Charles Ka Yui Leung

City University of Hong Kong ( email )

83 Tat Chee Avenue
Hong Kong

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