Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments December 2005 erstellt
Description:
The empirical relationship between the average growth rate and volatility of growth rates, both over time and across countries, has important policy implications, which depend critically on the sign of the relationship. Following Ramey and Ramey (1995) a wide consensus has been building that, in the post WWII data, the correlation is negative. We replicate their result and then find that it is not robust to either the definition of growth rate or the composition of the sample. We show that the use of log difference as growth rates, as in Ramey and Ramey, creates a strong bias towards finding a negative relationship. Further, we exhaustively investigate this relationship for various definitions of growth rates, several datasets, across time, across countries, within groups of countries, and within US. We use different methods and control variables for this inquiry. Our analysis suggests that there is no significant relationship between the two variables in question