Tolerable recessións and long term growth

Abstract

This article sets out from the coexistence of two kinds of growth, a determinist one to the steady state and a random one, which, systematically, let some economies escape from that steady state. The last is related with the innovation business processes, which are only possible in presence of both inventions in portfolio and a economic recession with certain characteristics. It show empirical evidence about the innovation process and growth deceleration, and its relationship with the cycle volatility in twenty developed countries as well as in a worldwide sample. The main conclusions point out the existence of two kinds of cycles: one have positive effect upon economic growth and the other not. The economic policy must try to reduce the influence of the last one but not the influence of those whose presence is essential in order to keep an enough economic growth rate in the long term.