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

1
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
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

2
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
3
Natural volatility in growing economies
__________________________________________________
______________
3. A Model (Posch and Wälde, 2005)
press enter when ready
press enter when ready
press enter when ready
press (last time) 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
4
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/Nat
uralVolatility.pdf
Klaus Wälde Department of Economics
University of Würzburg www.waelde.com
u
u