Klaus Wälde * Department of Economics * University of Würzburg * www.waelde.com
1. How it fits into the literature
Natural volatility in growing economies________________________________________________________________
growththeories
exogenousexplanation
Solow
okay!
endogenousexplanation
RomerLucasAghion HowittGrossman Helpman
fluctuations
RBC, sunspots
okay!okay!
growth and
fluctuations
endogenousexplanation
Bental and PeledMatsuyama
WäldeFrancois and Lloyd-Ellis
aha?!?
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2. Why do growing economies fluctuate?(see e.g. Bental und Peled 1996, Matsuyama 1999, Wälde 1999, 2002, 2005 Francois and Lloyd-Ellis 2003)
Klaus Wälde * Department of Economics * University of Würzburg * www.waelde.com
Natural volatility in growing economies________________________________________________________________
TFP grows in discrete steps rather than smoothly!
Growth models with exogenous or endogenous growth:TFP growth is smooth
Natural volatility:TFP growth turns out to follow a step function
•
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3. A Model (Posch and Wälde, 2005)
Klaus Wälde * Department of Economics * University of Würzburg * www.waelde.com
Natural volatility in growing economies
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Fig. 1a: Cyclical component Fig. 1b: Corresponding level of GDP
Klaus Wälde * Department of Economics * University of Würzburg * www.waelde.com
Natural volatility in growing economies
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Want more details?
See the survey and more references in:
http://www.wifak.uni-wuerzburg.de/vwl2/nv/NaturalVolatility.pdf
Thank you for your attention!
