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How global risk perceptions affect economic growth, Accessible Data
Figure 1. Perceived risk and growth
In the figure we visualize our main mechanism. The figure includes two panels. In the top panel we start with high risk. It leads high uncertainty, lower investment, and low growth contemporaneously and the year following.
In the bottom left-hand panel, we consider low risk. In the bottom middle there are three outcomes: high bond risk, high capital flows, and high investment, all leading to high growth contemporaneously and the year following. In the bottom right-hand panel, investment quality decreases, so does growth.
Figure 2. Global duration of low risk and major economic events
| Year (shaded area - major economic events) | Global duration of low risk |
|---|---|
| 1900 | 0 |
| 1901 | 0.03 |
| 1902 (1902-04 Recession) | 0.07 |
| 1903 | 0.14 |
| 1904 | 0.22 |
| 1905 | 0.28 |
| 1906 | 0.31 |
| 1907 (Panic of 1907) | 0.02 |
| 1908 | 0.03 |
| 1909 | 0.10 |
| 1910 (Panic of 1910-11) | 0.18 |
| 1911 | 0.12 |
| 1912 | 0.17 |
| 1913 (Recession) | 0.22 |
| 1914 (WW1 starts) | 0.01 |
| 1915 | 0.10 |
| 1916 | 0.17 |
| 1917 | 0.02 |
| 1918 (Post WW1 recession) | 0.11 |
| 1919 | 0.05 |
| 1920 (Depression of 1920) | 0.02 |
| 1921 | 0.07 |
| 1922 | 0.03 |
| 1923 (Recession) | 0.05 |
| 1924 | 0.12 |
| 1925 | 0.20 |
| 1926 (Recession) | 0.24 |
| 1927 | 0.12 |
| 1928 | 0.16 |
| 1929 (Great Depression) | 0.10 |
| 1930 | 0.11 |
| 1931 | 0.00 |
| 1932 | 0.02 |
| 1933 | 0.08 |
| 1934 | 0.16 |
| 1935 | 0.16 |
| 1936 | 0.20 |
| 1937 (Recession) | 0.18 |
| 1938 | 0.04 |
| 1939 (WW2 starts) | 0.06 |
| 1940 | 0.08 |
| 1941 | 0.14 |
| 1942 | 0.22 |
| 1943 | 0.26 |
| 1944 | 0.26 |
| 1945 (Recession) | 0.39 |
| 1946 | 0.35 |
| 1947 | 0.31 |
| 1948 (Recession) | 0.05 |
| 1949 | 0.11 |
| 1950 | 0.19 |
| 1951 | 0.20 |
| 1952 | 0.22 |
| 1953 (Recession) | 0.28 |
| 1954 | 0.14 |
| 1955 | 0.05 |
| 1956 | 0.06 |
| 1957 (Recession) | 0.06 |
| 1958 | 0.13 |
| 1959 | 0.10 |
| 1960 (Recession) | 0.03 |
| 1961 | 0.03 |
| 1962 | 0.03 |
| 1963 | 0.06 |
| 1964 | 0.09 |
| 1965 | 0.08 |
| 1966 | 0.05 |
| 1967 | 0.04 |
| 1968 | 0.07 |
| 1969 (Recession) | 0.00 |
| 1970 | 0.02 |
| 1971 | 0.03 |
| 1972 (Bretton Woods ends) | 0.04 |
| 1973 (1973-75 Recession) | 0.00 |
| 1974 | 0.01 |
| 1975 | 0.02 |
| 1976 | 0.04 |
| 1977 | 0.11 |
| 1978 | 0.12 |
| 1979 | 0.14 |
| 1980 (1980-82 Recession) | 0.07 |
| 1981 | 0.09 |
| 1982 | 0.06 |
| 1983 | 0.10 |
| 1984 | 0.14 |
| 1985 | 0.15 |
| 1986 | 0.07 |
| 1987 | 0.01 |
| 1988 | 0.06 |
| 1989 | 0.13 |
| 1990 (Early 1990s Recession) | 0.05 |
| 1991 | 0.11 |
| 1992 | 0.16 |
| 1993 | 0.22 |
| 1994 | 0.29 |
| 1995 | 0.30 |
| 1996 | 0.36 |
| 1997 | 0.12 |
| 1998 (Asian crisis) | 0.04 |
| 1999 | 0.10 |
| 2000 | 0.11 |
| 2001 (Early 2000s Recession) | 0.10 |
| 2002 | 0.12 |
| 2003 | 0.16 |
| 2004 | 0.23 |
| 2005 | 0.27 |
| 2006 | 0.31 |
| 2007 | 0.35 |
| 2008 (Global crisis) | 0.01 |
| 2009 | 0.01 |
| 2010 | 0.06 |
| 2011 | 0.09 |
| 2012 | 0.13 |
| 2013 (Euro crisis) | 0.18 |
| 2014 | 0.23 |
| 2015 | 0.10 |
| 2016 | 0.14 |
Note: The global duration of low risk (G-DLR) is calculated as the gross domestic product-weighted average of country specific DLRs. DLR considers the consecutive number of years in which stock market volatility remains low for a country with decaying weights. NBER recession dates are highlighted and relevant economic events are marked in the figure. Years that include parentheses indicate shaded areas with major economic events.
Source: Global Financial Data, https://www.globalfinancialdata.com/gfdplatform/login.aspx.