Liquidity Constraints and Business Cycles in Developing Economies☆☆☆

Carmichæl, Benoı̂t; Keita, Sikoro; Samson, Lucie

doi:10.1006/redy.1998.0054

Cited by 14 publications

(8 citation statements)

References 21 publications

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“…For the remaining developing countries in our sample, the figure is 12.9%. Those figures are consistent with the volatility figures documented by Mendoza (1995) and Carmichael et al (1999) for, respectively, 23 and 19 developing or recently industrialized countries using yearly data, and by Agénor et al (2000) for 12 middleincome countries using quarterly data. The magnitude of output fluctuations in donor countries (Table 5), by comparison, is a lot smaller, with an average volatility of 2.19% over the same period (2.18% in the United States).…”

supporting

confidence: 90%

“…Finally, our paper is at the intersection of two recent strands of literature. The first studies various business cycle phenomena in developing countries-see, in particular, Mendoza (1992Mendoza ( , 1995Mendoza ( , 1997, Carmichael et al (1999), Talvi and Végh (2000), and Agénor et al (2000). The second studies the business cycle properties of international capital flows-see, for example, Lane (1999).…”

Section: Introductionmentioning

confidence: 99%

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Foreign Aid and the Business Cycle

Pallage

Robe

2001

Rev International Economics

190

126

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In this paper, we document empirical regularities in the foreign aid flows to developing countries over the last three decades. In spite of a large body of literature on foreign aid and its impact on recipients, surprisingly little is known about its business cycle characteristics. We show that for the vast majority of African recipients, aid flows are a major source of income that is highly volatile and, most importantly, overwhelmingly procyclical. For recipients outside of Africa, we find a similar -if somewhat less pronounced -pattern of aid procyclicality. In contrast, there is little evidence of aid procyclicality with the business cycle of donors. In light of the very high volatility of output in developing countries, the procyclicality of foreign aid flows from the recipients' perspective raises serious questions related to their welfare and growth.

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supporting

confidence: 90%

Section: Introductionmentioning

confidence: 99%

Foreign Aid and the Business Cycle

Pallage

Robe

2001

Rev International Economics

190

126

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“…What is not debatable, in contrast, is that macroeconomic fluctuations in developing economies are of much higher magnitude than the fluctuations experienced in industrialized nations. In particular, the volatility of output in developing countries ranges from two to six times that in the United States (Mendoza, 1995;Carmichael et al, 1999;Agénor et al, 2000;Pallage and Robe, 2001).…”

Section: Modeling Considerationsmentioning

confidence: 99%

On the Welfare Cost of Economic Fluctuations in Developing Countries*

Pallage¹,

Robe²

2003

Int Economic Review

213

135

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Macroeconomic fluctuations are much stronger in developing countries than in the United States. Yet, while a large literature debates the welfare cost of economic fluctuations in the United States, it remains an open question how large that cost is in developing countries. Using several models, we provide such a measure. We find that the welfare cost of consumption volatility per se is far from trivial and averages a substantial multiple of the corresponding U.S. estimate. Moreover, in many poor countries, the welfare gain from eliminating volatility may in fact exceed the welfare gain from an additional percentage point of growth forever.

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“…8 For oil-importing countries, an increase in oil prices is expected to hamper consumption growth. Although our data set does not include the major oil exporters such as the Arab League and Russia, a positive relationship between oil prices and con- 6 However, it can be shown that when the risk aversion coe¢ cient ( ) di¤ers across countries, there will be no equi-proportional relationship between consumptions even in perfectly competitive and open markets. 7 We do not consider issues related to nonseparability due partly to the lack of consistent disaggregated (e.g., traded and notraded) data over time.…”

Section: Theoretical Modelmentioning

confidence: 99%

The threshold consumption correlation-based approach to international capital mobility: Evidence from advanced and developing countries

Nagayasu

2012

Structural Change and Economic Dynamics

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Using the consumption correlation-based criterion, this paper analyzes international capital mobility for both advanced and developing countries. We provide evidence that global capital markets are imperfectly integrated for both advanced and developing countries. However, a clear di¤erence between these groups of countries emerges when their consumption growth has stagnated; in developing countries at such times, the opportunity to smooth their consumption drops dramatically.JEL classi…cation: F3, F4

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Liquidity Constraints and Business Cycles in Developing Economies☆☆☆

Cited by 14 publications

References 21 publications

Foreign Aid and the Business Cycle

Foreign Aid and the Business Cycle

On the Welfare Cost of Economic Fluctuations in Developing Countries*

The threshold consumption correlation-based approach to international capital mobility: Evidence from advanced and developing countries

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