Study reveals hidden factors driving economic fluctuations worldwide
Stabilizing fluctuations in economic growth is important for policymakers. This study looked at how different factors affect the volatility of output growth in various countries. By analyzing GDP growth rates, researchers found that a significant portion of output volatility comes from factors outside of typical business cycle fluctuations. The choice of growth rate used in analysis can impact the results, with year-on-year rates showing more volatility at business cycle and long-run frequencies, while quarter-on-quarter rates show more volatility at high frequencies. The study also found that income levels and trade openness can influence the proportion of volatility in output growth, but these results may not be reliable due to measurement errors and the choice of growth rates.