1. Natural volatility in growing economies
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Natural volatility in growing economies
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1. How it fits into the literature
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growth and
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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 *

2. Natural volatility in growing economies
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Natural volatility in growing economies
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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)
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 *

3. Natural volatility in growing economies
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3. A Model (Posch and Wälde, 2005)
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Fig. 1a: Cyclical component Fig. 1b: Corresponding level of GDP
Klaus Wälde * Department of Economics * University of Würzburg * u u

4. Natural volatility in growing economies
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Klaus Wälde * Department of Economics * University of Würzburg * u u