- Growth Collapses
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- by Hausmann, Ricardo; Rodríguez, Francisco; Wagner, Rodrigo
- We study episodes where economic growth decelerates to negative rates.
While the majority of these episodes are of short duration, a substantial fraction last
for a longer period of time than can be explained as the result of business-cycle
dynamics. The duration, depth and associated output loss of these episodes differs
dramatically across regions. We investigate the factors associated with the entry of
countries into these episodes as well as their duration. We find that while countries
fall into crises for multiple reasons, including wars, export collapses, sudden stops
and political transitions, most of these variables do not help predict the duration of
crises episodes. In contrast, we find that a measure of the density of a country's
export product space is significantly associated with lower crisis duration. We also
find that unconditional and conditional hazard rates are decreasing in time, a fact that
is consistent with either strong shocks to fundamentals or with models of poverty
- Publication Type: WCFIA Working Paper
- Published Date: October 2006
- Field of Interest: International Economics
- Hausmann, Ricardo, Francisco Rodríguez, and Rodrigo Wagner. "Growth Collapses." Working Paper 2008-0040, Weatherhead Center for International Affairs, Harvard University, October 2006.
- Also CID Working Paper No. 136.