Wälde, Klaus; Launov, Andrey; Posch, Olaf - Verein für Socialpolitik - VfS - 2013
It is common practice to estimate the volatility-growth link by specifying a standard growth equation such that the … variance of the error term appears as an explanatory variable in this growth equation. The variance in turn is modelled by a … biased and inconsistent estimate of the volatility-growth link. Our simulations show that this effect is large. Once the …