Volatility and firm growth

Chong, Alberto; Gradstein, Mark

doi:10.1007/s10887-009-9037-y

Cited by 44 publications

(25 citation statements)

References 35 publications

(40 reference statements)

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“…Our theoretical and empirical results are complementary to the finding that volatility can have detrimental effects on growth (Chong and Gradstein 2009). The authors provide empirical evidence that unexpected changes in economic and fiscal policies is a channel through which the link between volatility and growth could materialize at the macro level.…”

Section: Further Related Literaturementioning

confidence: 51%

On the link between volatility and growth

Posch

Wälde

2011

J Econ Growth

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A model of growth with endogenous innovation and distortionary taxes is presented. Since innovation is the only source of volatility, any variable that influences innovation directly affects volatility and growth. This joint endogeneity is illustrated by working out the effects through which economies with different tax levels differ in their volatility and growth process. We obtain analytical measures of macro volatility based on cyclical output and on output growth rates for plausible parametric restrictions. This analysis implies that controls for taxes should be included in the standard growth-volatility regressions. Our estimates show that the conventional Ramey-Ramey coefficient is affected sizeably. In addition, tax levels do indeed appear to affect volatility in our empirical application.

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Section: Further Related Literaturementioning

confidence: 51%

On the link between volatility and growth

Posch

Wälde

2011

J Econ Growth

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“…In particular, Fisman and Svensson (2007) and Chong and Gradstein (2009) respectively show that corruption and the volatility of economic policies tend to reduce firms' growth.…”

Section: What Are the Impediments To Firms' Growth In Developing Counmentioning

confidence: 99%

Aid and Growth. Evidence from Firm-Level Data

Chauvet

Ehrhart

2015

SSRN Journal

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This paper explores the impact of foreign aid on firms growth for a panel of 5,640 firms in 29 developing countries, 11 of which in Africa. Using the World Bank Enterprise Surveys data and controlling for firms fixed effects, we find a positive impact of foreign aid on sales growth. This result is robust to various checks, notably to the instrumentation of aid. We then identify the main infrastructure obstacles to firms growth and examine whether foreign aid contributes to relaxing those constraints. We find that electricity and transport are perceived as important constraints which tend to decrease the growth rate of firms, as well as the utilization of their productive capacity. Evidence on the impact of aid on infrastructure obstacles suggests that total aid and aid to the energy sector tend to decrease electricity obstacles. We also show that transport aid projects, geo-localized at the region level, tend to decrease the transport obstacles.

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“…Third, unlike most other empirical studies that rely on country‐level data, this paper analyzes firm‐level variations based on a global survey of tens of thousands of business enterprises conducted by the World Bank and its partners. Chong and Gradstein () analyze a related issue of volatility and economic growth and observe that ‘much of the existing research relies on cross country analysis …’ (p. 2). Fourth, my dependent variable and many control variables do not rely on aggregate statistics reported by national statistical agencies, but are derived from direct answers to standardized survey questions.…”

Section: Introductionmentioning

confidence: 99%

“…Given the large number of countries included in my analysis – ninety‐four – there is likely to be a great deal of variation in the methods and quality of data collection among countries. In contrast, the World Bank surveys are carefully standardized and its ‘sampling criteria … [are] very precise’ (Chong and Gradstein, ). Fifth, unlike much of the existing research that proxy economic activity by GDP per capita (which, among other things, does not take into account the size of the underground economy), the dependent variable in this paper is constructed on the basis of direct evaluations of the business environment by firm owners and managers.…”

Section: Introductionmentioning

confidence: 99%

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Entrenched Autocracy or New Democracy: Which Is Better for Business?

Nur-tegin

2014

Kyklos

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Summary The recent downfall of autocracies worldwide, most notably in the Middle East, raises the question: Do the new, more democratic regimes hold a promise of creating a better economic and business environment? To answer this question, I analyze a new large‐scale firm‐level dataset for the post‐regime‐change time horizon of up to 20 years. The main finding is that during the post‐revolution time period the business environment is likely to worsen under the new politically unstable regimes that replace stable autocracies.

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Volatility and firm growth

Abstract: Firm growth, Policy volatility, Institutions, E60, H11, O11,

Cited by 44 publications

References 35 publications

On the link between volatility and growth

On the link between volatility and growth

Aid and Growth. Evidence from Firm-Level Data

Entrenched Autocracy or New Democracy: Which Is Better for Business?

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