We study the link between output growth and output variability in a simple stochastic AK growth model with nominal rigidities. Our analysis predicts that the relationship between output growth and output variability depends on the nature of the shocks hitting the economy, with the variance of money shocks having a negative effect on growth in the presence of nominal wage contracts.
Blackburn, K., Pelloni, A. (2004). On the relationship between growth and volatility. ECONOMICS LETTERS, 83(1), 123-127 [10.1016/j.econlet.2003.10.010].
On the relationship between growth and volatility
PELLONI, ALESSANDRA
2004-01-01
Abstract
We study the link between output growth and output variability in a simple stochastic AK growth model with nominal rigidities. Our analysis predicts that the relationship between output growth and output variability depends on the nature of the shocks hitting the economy, with the variance of money shocks having a negative effect on growth in the presence of nominal wage contracts.File in questo prodotto:
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