Growth Collapses

KSG Working Paper No. RWP06-046

CID Working Paper No. 136

48 Pages Posted: 31 Oct 2006

See all articles by Ricardo Hausmann

Ricardo Hausmann

Harvard University - Harvard Kennedy School (HKS)

Francisco Rodríguez

University of Denver - Josef Korbel School of International Studies

Rodrigo Andres Wagner

UAI Business School ; Growth Lab - Harvard University (Center for Int. Development)

Date Written: October 2006

Abstract

We study episodes where economic growth decelerates to negative rates. While the majority of these episodes are of short duration, a substantial fraction last for a longer period of time than can be explained as the result of business-cycle dynamics. The duration, depth and associated output loss of these episodes differs dramatically across regions. We investigate the factors associated with the entry of countries into these episodes as well as their duration. We find that while countries fall into crises for multiple reasons, including wars, export collapses, sudden stops and political transitions, most of these variables do not help predict the duration of crises episodes. In contrast, we find that a measure of the density of a country's export product space is significantly associated with lower crisis duration. We also find that unconditional and conditional hazard rates are decreasing in time, a fact that is consistent with either strong shocks to fundamentals or with models of poverty traps.

Keywords: stagnation, economic growth, duration analysis, structural transformation, exports

JEL Classification: C41, E32, O11, O25

Suggested Citation

Hausmann, Ricardo and Rodríguez, Francisco and Wagner, Rodrigo Andres, Growth Collapses (October 2006). KSG Working Paper No. RWP06-046, CID Working Paper No. 136, Available at SSRN: https://ssrn.com/abstract=902392 or http://dx.doi.org/10.2139/ssrn.902392

Ricardo Hausmann (Contact Author)

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Mailbox 34
Cambridge, MA 02138
United States
617-496-3740 (Phone)
617-496-8753 (Fax)

HOME PAGE: http://www.hks.harvard.edu/about/faculty-staff-directory/ricardo-hausmann

Francisco Rodríguez

University of Denver - Josef Korbel School of International Studies ( email )

Denver, CO 80208
United States

Rodrigo Andres Wagner

UAI Business School

Diagonal Las Torres 2700
Penalolen
Santiago
Chile

HOME PAGE: http://https://sites.google.com/site/rodrigoawagner

Growth Lab - Harvard University (Center for Int. Development) ( email )

79 John F. Kennedy Street
Cambridge, MA MA 02138
United States

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