The Relationship between Business Cycles Volatilities and Economical Growth

One of the important issues, proposed in each country is reaching to stable growth in long run period. The aim of this research is to examine the effect of Business Cycles Volatilities on economical Growth for 61 countries round the world during 1960-2007. ( 4 groups of countries with high income, high average income, low average income and finally the countries with low income). Gross National Product Growth, Business Cycles Volatilities, Inflation, Inflation Uncertainty and financial depth are the considered variables in this research. In this study, firstly, business Cycles Volatilities and Inflation Uncertainty are estimated through Generalized Autoregressive Conditional Heteroskdasticity models, then the effect of cyclic volatilities on long run economical growth are estimated through Panel Data. In case of two variables of inflation and inflation uncertainty, we can say that in developed and rich countries, inflation have positive effect on long run economic growth while in other income groups, it leaves negative effect on economic growth. Also the relationship between inflation uncertainty and economic growth is negative in all income groups. The outcomes of this study in relation with financial depth indicator on long run economic growth is positive in countries with high income and the countries with high average income. On the other hand this coefficient for countries with high average income is higher than the one for countries with high income. Also the coefficient of this indicator for countries with low average income (such as Iran) and the countries with low income is negative.