EconPapers    
Economics at your fingertips  
 

Trend Shocks and Economic Development

Claude Francis Naoussi and Fabien Tripier ()

Working Papers from CEPII research center

Abstract: This article explores the role of trend shocks in explaining the specificities of business cycles in developing countries using the methodology introduced by Aguiar and Gopinath (2007) [“Emerging Market Business Cycles: The Cycle Is the Trend” Journal of Political Economy 115(1)]. We specify a small open economy model with transitory and trend shocks on productivity to replicate the differences in the business cycle behavior observed between developed, emerging, and Sub-Saharan Africa countries. Our results suggest a strong relationship between the weight of trend shocks in the source of fluctuations and the level of economic development. The weight of trend shocks is (i) higher in Sub-Saharan Africa countries than in emerging and developed countries, (ii) negatively correlated with the level of income, the quality of institutions, and the size of the credit market, and (iii) uncorrelated with the volatility of aid received by countries, the inflation rate, and the trend in trade-openness.

Keywords: Business Cycle; Permanent shocks; Growth; Africa; Small open economy (search for similar items in EconPapers)
JEL-codes: E32 F41 O55 (search for similar items in EconPapers)
Date: 2013-01
New Economics Papers: this item is included in nep-afr, nep-dev, nep-dge, nep-mac and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

Downloads: (external link)
http://www.cepii.fr/PDF_PUB/wp/2013/wp2013-03.pdf (application/pdf)

Related works:
Journal Article: Trend shocks and economic development (2013) Downloads
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: https://EconPapers.repec.org/RePEc:cii:cepidt:2013-03

Access Statistics for this paper

More papers in Working Papers from CEPII research center Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2021-05-24
Handle: RePEc:cii:cepidt:2013-03