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Growth and Output Fluctuations
Author(s) -
Li CholWon
Publication year - 2000
Publication title -
scottish journal of political economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.4
H-Index - 46
eISSN - 1467-9485
pISSN - 0036-9292
DOI - 10.1111/1467-9485.00155
Subject(s) - economics , subsidy , endogenous growth theory , contraction (grammar) , technological change , econometrics , monotonic function , productivity , variance (accounting) , technical change , amplitude , monetary economics , physics , macroeconomics , mathematics , biology , market economy , endocrinology , optics , mathematical analysis , accounting , human capital
This paper sheds new light on the interaction between growth and output fluctuations. Our approach is different from the literature in that we analyse how endogenous fluctuations are affected by a faster productivity growth in the long run. Main results: (i) expansion (or contraction) occurs more (or less) frequently, (ii) expansion becomes milder but contraction severer, (iii) the amplitude of fluctuations becomes larger, (iv) the variance of output changes ambiguously, indicating a non‐monotonic relationship. We also investigate how an R&D subsidy alters the nature of output fluctuations and re‐examine its effect on technological change in the presence of recurrent cycles. The result questions the widely‐accepted theoretical implication that a research subsidy unambiguously promotes technological progress.