Empirical analysis of the relationship between cycle growth volatility and economic growth: the case of Lebanon

Jean-François Verne, Rosette Ghossoub Sayegh

Université Saint-Joseph de Beyrouth, Faculté de Sciences Économiques, Centre de Documentation et de Recherche Économique (CEDREC)

Auteur correspondant : Jean-François Verne, jean-françois.verne@usj.edu.lb, jean-francois.verne@laposte.net

Summary : This paper analyses the evolution of the growth cycle and volatility in Lebanon during the period of 1970–2015. First, GDP growth observed over its potential level is determined by taking into account the break dates coinciding with conflict and political instability. Then, an estimation of the impact of conflict on the output gap volatility is held to analyze the causal relationship between this same volatility and growth. It turned out that contrary to what is suggested by the literature, it is economic growth that explains the volatility of economic cycles.

Keywords: growth cycle, growth rate, volatility, potential production, production effective, economic instability, conflicts.

JEL Classification : E32, E37, O47, D74.