A common question in the literature on economic fluctuations is whether business cycles are all alike. Among industrial economies, one of the most analyzed characteristics of business cycles is the persistence of output fluctuations. By persistent fluctuations we mean output fluctuations that...

This paper shows that in a cross section of countries there exists a strong positive correlation between long-term growth rates and the persistence of output fluctuations. We argue that the traditional explanation of persistence, an RBC model with exogenous productivity shocks, cannot account...

This paper studies the effects of discretionary fiscal policy on output volatility and economic growth. Using data for ninety-one countries we isolate three empirical regularities: (1) Governments that use fiscal policy aggressively induce significant macroeconomic instability; (2) The...