Magnitude X on the Richter Scale: Welfare Cost of Business Cycles in Developing Countries

Stephane Pallage () and Michel A. Robe ()

No 124, Cahiers de recherche CREFE / CREFE Working Papers from CREFE, Université du Québec à Montréal

Abstract: Economic fluctuations are much stronger in developing countries than in the United States. Yet, while a large literature debates what constitutes a reasonable estimate of the welfare cost of business cycles in the US, it remains an open question how large that cost is in developing countries. Using several model economies, we provide such a measure for a large number of low--income countries. Our first main result is that the welfare cost of output fluctuations per se is far from trivial in those countries, and typically averages 15 to 30 times the corresponding estimate for the US. Our second major result is that, in many poor countries, that cost may in fact exceed the welfare cost of significantly lower growth.

Keywords: business cycles; consumption volatility; welfare cost (search for similar items in EconPapers)
JEL-codes: E32 E60 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge
Date: 2000-10
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed

Forthcoming in the International Economic Review, 2002, new title On the Welfare Cost of Economic Fluctuations in Developing Countries

Downloads: (external link)
http://www.unites.uqam.ca/eco/CREFE/cahiers/cah124.ps Main text (application/postscript)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.unites.uqam.ca/eco/CREFE/cahiers/cah124.ps [301 Moved Permanently]--> http://www.economie.uqam.ca/CREFE/cahiers/cah124.ps [301 Moved Permanently]--> http://www.economie.esg.uqam.ca/CREFE/cahiers/cah124.ps)
http://www.unites.uqam.ca/eco/CREFE/cahiers/cah124.pdf Main text (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Affichage introuvable [name, type, prefix] : category, pdf, contentView (http://www.unites.uqam.ca/eco/CREFE/cahiers/cah124.pdf [301 Moved Permanently]--> http://www.economie.uqam.ca/CREFE/cahiers/cah124.pdf [301 Moved Permanently]--> http://www.economie.esg.uqam.ca/CREFE/cahiers/cah124.pdf)

Related works:
Working Paper: Magnitude X on the Richter Scale: Welfare Cost of Business Cycles in Developing Countries (2001)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:cre:crefwp:124

Access Statistics for this paper

More papers in Cahiers de recherche CREFE / CREFE Working Papers from CREFE, Université du Québec à Montréal
Address: P.O. Box 8888, Downtown Station, Montreal (Canada) Quebec, H3C 3P8
Contact information at EDIRC.
Series data maintained by Stéphane Pallage ().