Going up and down: rethinking the empirics of growth in the developing and newly industrialized world

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. decline. We propose a methodology and a taxonomy that will characterize countries' growth patterns on the basis of the sequence of regimes they experience. In particular, we emphasize the difference between expansionary and recessionary regimes and, after classifying the growth pattern of all 123 developing countries in our dataset, we explore cross-sectional empirical regularities which emerge during upward and downward growth phases. Results show that expansionary regimes are associated with convergence and positive correlation between growth and (short run) volatility. On the contrary, in recessionary regimes, poorer countries face deeper failures and a negative correlation between growth and volatility is found, signifying that output fluctuates less around the trend during strong rather than mild recessions. Finally, we discover that regimes of growth and recession show similar average length (about 16 years). Although recessions on average are remarkably pronounced (14% loss), during expansions the magnitude of growth is much larger. Terms of use: Documents in JEL codes: O11, O40, O47Keywords: growth, structural breaks, expansionary and recessionary regimes, convergence * Corresponding author: Francesco Lamperti, piazza Martiri della Libertà 33, 56127, Pisa (Italy), email address:f.lamperti@sssup.it. The authors want to thank Flavio Calvino, Claude Diebolt, Giovanni Dosi, Andrea Mario Lavezzi and Andrea Roventini for useful comments and suggestions. All the shortcomings are our own.

Characterizing growth instability: new evidence on unit roots and structural breaks in countries’ long run trajectories

“…Intuitively, those countries tend to experience more erratic growth processes with persistent and frequent (possibly more than four) shifts in both level and trend. This is in line with several contributions emphasizing the ubiquitous presence of growth discontinuities in poor-and middle-income countries (Pritchett et al 2000;Hausmann et al 2005;Lamperti and Mattei 2018b). Yet, it should be noticed that results may be affected by the shorter time series (the average number of observations for developing countries is 147) or by higher variance.…”

“…Growth experiences are remarkably heterogeneous. Considering aggregate income data, it is common to observe several growth discontinuities of different kinds such as accelerations, collapses, sudden stops or level jumps (Easterly et al 1993;Pritchett et al 2000;Hausmann et al 2005;Lamperti and Mattei 2018b). Nevertheless, there is clearly less consensus when it comes to characterizing growth instability with econometric models.…”

Agent-based model calibration using machine learning surrogates

“…The second condition aims at capturing the presence of fat tails in the output growthrate distributions. These empirical regularities suggest that deep downturns can coexist with mild fluctuations and has been found in both OECD (Fagiolo et al, 2008) and developing countries (Castaldi and Dosi, 2009;Lamperti and Mattei, 2016). More specifically, we fit a symmetric exponential power distribution (see Subbotin, 1923;Bottazzi and Secchi, 2006) , whose functional form reads:…”

Structural Changes and Growth Regimes

“…the unified growth theory) (Galor, 2007), due, for instance, to households' reproduction and education strategies (Galor and Weil, 2000;Boucekkine et al, 2002), firm growth (Desmet and Parente, 2012), or changes to technology and demand (Ciarli et al, 2012). A number of empirical studies investigate structural breaks in growth patterns, focusing particularly on developing countries (Kar et al, 2013;Lamperti and Mattei, 2016;Pritchett, 2000). Jones and Olken (2008) characterise the transition between regimes and find that different countries follow a common pattern of growth accelerations and declines.…”