Macroeconomic Volatility and Welfare in Developing Countries: an Introduction

Norman Loayza (), Romain Ranciere, Luis Servén and Jaume Ventura
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Jaume Ventura: CREI - Centre de Recerca en Economia Internacional - UPF - Universitat Pompeu Fabra [Barcelona]

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Abstract: Macroeconomic volatility, both a source and a reflection of underdevelopment, is a fundamental concern for developing countries. Their high aggregate instability results from a combination of large external shocks, volatile macroeconomic policies, microeconomic rigidities, and weak institutions. Volatility entails a direct welfare cost for risk-averse individuals, as well as an indirect one through its adverse effect on income growth and development. This article provides a brief overview of the recent literature on macroeconomic volatility in developing countries, highlighting its causes, consequences, and possible remedies. It then introduces the contributions of a recent conference on the subject, sponsored by the World Bank and Pompeu Fabra University, Barcelona.

Date: 2007-10
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Published in World Bank Economic Review, 2007, 21 (3), pp.343-357. ⟨10.1093/wber/lhm017⟩

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Journal Article: Macroeconomic Volatility and Welfare in Developing Countries: An Introduction (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00754201

DOI: 10.1093/wber/lhm017

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