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- Title
Do Business Cycles Cast Long Shadows? Short-Run Persistence and Economic Growth.
- Authors
Fatas, Antonio
- Abstract
Thisarticle explores the links between cyclical fluctuations andlong-run growth in the context of an endogenous growth modelwith aggregate demand externalities. In this model, aggregatedemand and growth rates are positively correlated. In the presenceof exogenous cyclical shocks, the model is able to generate persistentfluctuations through the effects that business cycles have onaggregate demand, profits and technological progress. Persistencebecomes a measure of the response to business cycles of growth-relatedvariables. Empirical evidence from a large sample of countriessuggests that there is indeed a correlation between how persistentfluctuations are and the long-term growth rates of GDP.
- Subjects
BUSINESS cycles; BUSINESS conditions; ECONOMIC indicators; ECONOMIC development; ECONOMIC activity
- Publication
Journal of Economic Growth, 2000, Vol 5, Issue 2, p147
- ISSN
1381-4338
- Publication type
Article
- DOI
10.1023/A:1009885203490