Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/129993 
Year of Publication: 
2014
Series/Report no.: 
School of Economics Discussion Papers No. 1417
Publisher: 
University of Kent, School of Economics, Canterbury
Abstract: 
The present paper studies the interaction between short-run fluctuations and economic growth by presenting empirical evidence of the impact of business cycle fluctuations on the rate of growth consistent with a constant unemployment rate in 13 Latin American and 18 OECD countries during the period 1981-2011. The results of both parametric (OLS and a panel estimator that allows for parameter heterogeneity and cross section dependence) and non-parametric (a penalized regression spline estimator) econometric techniques show that this measure of potential output experiences positive (negative) changes in periods of high (low) growth in the majority of countries, and, hence, that business cycles fluctuations have statistically significant effects on potential output. However, in contrast to the sample of OECD countries, less than half of the sample of Latin American countries experience statistically significant changes of this measure of potential output in periods of low growth.
Subjects: 
growth and cycles
potential rate of growth
rate of growth consistent with a constant unemployment rate
JEL: 
E32
O40
O51
O54
Document Type: 
Working Paper

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