Volatility and growth in developing countries: An asymmetric effect

This paper investigates the relationship between macroeconomic volatility and growth and the determination of a threshold from which there is a reversal of the nature of this relationship in a panel of 47 developing countries over the period 1980-2013. Using Hansen (2000) methodology our findings prove that the relationship between macroeconomic volatility on economic growth is not linear and it looks like reversed Laffer curve as long as the volatility is below 4%.