The Deep Historical Roots of Macroeconomic Volatility

22 Pages Posted: 5 Dec 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: December 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.

Suggested Citation

Tang, Sam Hak Kan and Leung, Charles Ka Yui, The Deep Historical Roots of Macroeconomic Volatility (December 2016). Economic Record, Vol. 92, Issue 299, pp. 568-589, 2016. Available at SSRN: https://ssrn.com/abstract=2879678 or http://dx.doi.org/10.1111/1475-4932.12278

Sam Hak Kan Tang (Contact Author)

University of Western Australia ( email )

Nedlands, Western Australia 6907
Australia

Charles Ka Yui Leung

City University of Hong Kong ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

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