UK output variability and growth: Some further evidence

This paper re-examines the empirical evidence concerning the relationship b etween UK output variability and growth using GARCH-M models applied to pos t-war monthly industrial production data, estimated under quasi-maximum-lik elihood with the consistent variance-covariance estimator of Bollerslev and Wooldridge (1992). In contrast to previous results suggesting a significan t positive relationship between UK output variability and growth, we find n o significant relationship. Rather than suggesting a connection between ris k and return in the attitudes of investors, our findings may be interpreted as more supportive of macroeconomic models which dichotomize the determina tion of output growth and variability.