EFFECTS OF MACROECONOMIC VOLATILITY ON ECONOMIC GROWTH: EVIDENCE FROM THE EUROPEAN UNION

Abstract

This paper investigates the relationship between macroeconomic volatility and economic growth for the period from 1995 to 2015. At the literature net economic growth effect of volatility is ambiguous. In this study, the factors which are gradually affecting the economic growth are estimated. This paper also contributes to the literature by focusing on how volatility affects economic growth and gives some policy implications. It is found that economic growth is lower in the presence of volatility at the European Union countries. This shows that smoother economic policy is crucial for the stable economic growth. Uncertainty effects economic growth negatively

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