Klaus Wlde Department of Economics University of Wrzburg www'waelde'com - PowerPoint PPT Presentation

Title: Klaus Wlde Department of Economics University of Wrzburg www'waelde'com


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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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growththeories
fluctuations
fluctuations
exogenous explanation
Solow
RBC, sunspots
Bental and Peled
Romer Lucas Aghion Howitt Grossman Helpman
endogenousexplanation
endogenousexplanation
Matsuyama
Wälde
Francois and Lloyd-Ellis

• Klaus Wälde Department of Economics
  University of Würzburg www.waelde.com

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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 www.waelde.com
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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 www.waelde.com
u
u
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Natural volatility in growing economies
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Want more details?
Thank you for your attention!
See the survey and more references
in http//www.wifak.uni-wuerzburg.de/vwl2/nv/Nat
uralVolatility.pdf
Klaus Wälde Department of Economics
University of Würzburg www.waelde.com
u
u