engleski

The Financial Accelerator, Globalization and Output Growth Volatility

One explanation of waning output volatility before the current global downturn is that international diversification of net worth reduced the strength of the Financial Accelerator. We analyse data from 85 countries and cannot reject this hypothesis. We also find that increasing trade may have increased output volatility. In these respects, while globalization may make economies more exposed to external shocks it may also have helped to make them more resistant to such shocks. Finally, we report some limited evidence that this source of stability was transient and that its attenuation may have contributed to the end of the “ Great Moderation” .

GDP growth volatility; the “ Great Moderation”; Financial Accelerator; globalization.

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