Natural volatility in growing economies press ‘enter‘ when ready Natural volatility in growing economies ________________________________________________________________ aha?!? okay! okay! 1. How it fits into the literature okay! growth and Ready to start? Press ‘enter‘ growth theories fluctuations fluctuations exogenous explanation Solow RBC, sunspots Bental and Peled Romer Lucas Aghion Howitt Grossman Helpman endogenous explanation endogenous explanation Matsuyama Wälde Francois and Lloyd-Ellis Klaus Wälde * Department of Economics * University of Würzburg * www.waelde.com
Natural volatility in growing economies press ‘enter‘ when ready Natural volatility in growing economies ________________________________________________________________ 2. Why do growing economies fluctuate? (see e.g. Bental und Peled 1996, Matsuyama 1999, Wälde 1999, 2002, 2005 Francois and Lloyd-Ellis 2003) 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 Klaus Wälde * Department of Economics * University of Würzburg * www.waelde.com
Natural volatility in growing economies ________________________________________________________________ 3. A Model (Posch and Wälde, 2005) press (last time) ‘enter‘ when ready press ‘enter‘ when ready press ‘enter‘ when ready press ‘enter‘ when ready Fig. 1a: Cyclical component Fig. 1b: Corresponding level of GDP Klaus Wälde * Department of Economics * University of Würzburg * www.waelde.com u u
Natural volatility in growing economies ________________________________________________________________ Want more details? Thank you for your attention! See the survey and more references in: http://www.wifak.uni-wuerzburg.de/vwl2/nv/NaturalVolatility.pdf Klaus Wälde * Department of Economics * University of Würzburg * www.waelde.com u u