02130cas a2200265 a 4500 AALejournalIMF003379 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451860382 1018-5941 BD-DhAAL BD-DhAAL Prasad, Eswar. How Do Trade and Financial Integration Affect the Relationship Between Growth and Volatility? / Eswar Prasad, Marco Terrones, Ayhan Kose. Washington, D.C. : International Monetary Fund, 2005. 1 online resource (38 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students The influential work of Ramey and Ramey (1995) highlighted an empirical relationship that has now come to be regarded as conventional wisdom-that output volatility and growth are negatively correlated. We reexamine this relationship in the context of globalization-a term typically used to describe the phenomenon of growing international trade and financial integration that has intensified since the mid-1980s. Using a comprehensive new data set, we document that, while the basic negative association between growth and volatility has been preserved during the 1990s, both trade and financial integration significantly weaken this negative relationship. Specifically, we find that, in a regression of growth on volatility and other controls, the estimated coefficient on the interaction between volatility and trade integration is significantly positive. We find a similar, although less significant, result for the interaction of financial integration with volatility. Mode of access: Internet Kose, Ayhan. Terrones, Marco. IMF Working Papers; Working Paper ; No. 2005/019 Full text available on IMF http://elibrary.imf.org/view/journals/001/2005/019/001.2005.issue-019-en.xml IMF e-Library