Growth, Volatility and Political Instability: Non-Linear Time-Series Evidence for Argentina, 1896-2000

What is the relationship between economic growth and its volatility? Does political instability affect growth directly or indirectly, through volatility? This paper tries to answer such questions using a power-ARCH framework with annual time series data for Argentina from 1896 to 2000. We show that while assassinations and strikes (what we call “informal” political instability) have a direct negative effect on economic growth, “formal” political instability (constitutional and legislative changes) has an indirect (through volatility) negative impact. We also find preliminary support for the idea that while the effects of “formal” instability are stronger in the long-run, those of “informal” instability are stronger in the short-run.

Modeling the link between US inflation, output and their variabilities

This paper employs the unrestricted extended constant conditional correlation GARCH specification proposed in Conrad and Karanasos (2010) to examine the intertemporal relationship between the uncertainties of inflation and output growth in the US. We find that inflation uncertainty effects output variability positively, while output variability has a negative effect on inflation uncertainty. In addition, we find a negative/positive relation between nominal uncertainty and output growth/inflation. Finally, both lagged inflation as well as lagged output growth have a positive/negative effect on nominal/real uncertainty

From Riches to Rags, and Back? Explaining the Growth Trajectory of Argentina since the 1890s

Argentina is the only country in the world that was developed in 1900 and developing in 2000. Although various underlying reasons have been identified (chiefly political instability, financial development, inflation, trade openness, and international financial integration), no study has quantitatively assessed their relative importance. This paper tries to fill this gap. We use the power-ARCH framework and annual data since 1896 to study how important are these factors vis-à-vis both growth and growth volatility. Our results suggest that financial development, trade openness and political instability are the main factors, with important differences in terms of their short versus long-run behavior. --economic growth,financial development,volatility,political instability,trade openness,power-GARCH

Two to Tangle: Financial Development, Political Instability and Economic Growth in Argentina (1896–2000)

This paper investigates the effects of financial development and political instability on economic growth in a power-ARCH framework with data for Argentina from 1896 to 2000. Our findings suggest that (i) informal or unanticipated political instability (e.g., guerrilla warfare) has a direct negative impact on growth; (ii) formal or anticipated instability (e.g., cabinet changes) has an indirect (through volatility) impact on growth; (iii) the effect of financial development is positive and, surprisingly, not via volatility; (iv) the informal instability effects are much larger in the short- than in the long-run; and (v) the impact of financial development on economic growth is negative in the short- but positive in the long-run.economic growth, financial development, volatility, political instability, power-ARCH

From Riches to Rags, and Back? Explaining the Growth Trajectory of Argentina since the 1890s

Argentina is the only country in the world that was 'developed' in 1900 and 'developing' in 2000. Although various underlying reasons have been identified (chiefly political instability, financial development, inflation, trade openness, and international financial integration), no study has quantitatively assessed their relative importance. This paper tries to fill this gap. We use the power-ARCH framework and annual data since 1896 to study how important are these factors vis-à-vis both growth and growth volatility. Our results suggest that financial development, trade openness and political instability are the main factors, with important differences in terms of their short versus long-run behavior

From Riches to Rags, and Back? Institutional Change, Financial Development and Economic Growth in Argentina since the 1890s

Argentina is the only country in the world that was "developed" in 1900 and "developing" in 2000. The various competing explanations highlight, mainly, the roles of trade openness, political institutions, financial integration, financial development, and macroeconomic instability. Yet no study has, to the best of our knowledge, attempted a quantitative assessment of the relative importance of each of these competing explanations. This paper tries to fill this gap. It investigates their individual effects on economic growth and volatility using the power-ARCH framework with annual data since the 1890s. The results indicate that financial development and institutional change are the two main factors that help understand the extraordinary growth trajectory of Argentina over the last century

Two to tangle: financial development, political instability and economic growth in Argentina (1896 - 2000)

This paper investigates the effects of financial development and political instability on economic growth in a power-ARCH framework with data for Argentina from 1896 to 2000. Our findings suggest that (i) informal or unanticipated political instability (e.g., guerrilla warfare) has a direct negative impact on growth; (ii) formal or anticipated instability (e.g., cabinet changes) has an indirect (through volatility) impact on growth; (iii) the effect of financial development is positive and, surprisingly, not via volatility; (iv) the informal instability effects are much larger in the short- than in the long-run; and (v) the impact of financial development on economic growth is negative in the short- but positive in the long-run

The Greek dra(ch)ma: 5 years of austerity. The three economists’ view and a comment.

In this paper, we summarize the opinion of three renowned economists,namely Paul De Grauwe, Paul Krugman and Joseph Stiglitz, on the Eurozone crisis as well as on the Greek case. All three expressed in one way or another their reservations about the single currency. On the one hand, De Grauwe and Stiglitz highlighted the design failures of the Eurozone, and on the other Krugman argued that the creation of the common currency was a terrible mistake. In support of their claims we provide evidence of the negative consequences of the austerity measures that were implemented by the troika on the Greek economy for a period covering 2010-2014. After five years of austerity, Greece among others experienced significant deflationary dynamics, deep recession, high unemployment rates that are among the highest in Europe, and an increase of the percentage of the people at risk of poverty or social exclusion. More specifically, GDP per capita growth shrank on average by 5.85 percent in the period 2010-2013 while the unemployment rate reached 25.5 percent in 2015. Even more remarkable is the fact that the youth unemployment rate reached 52.4 percent in 2014. Finally, 14 percent of the population cannot meet its medical needs due to the high cost of treatment

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