روند شوک و توسعه اقتصادی

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). 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.

Developing countries, widely-known to be among the poorest of the world, are also among the most unstable economies, and these economies have the highest volatilities of output and consumption. This article explores the role of trend shocks in explaining specificities of business cycles in developing countries. Because developing countries are very heterogeneous, we draw distinction between a set of emerging countries, which are middle-income countries, and Sub-Saharan Africa (SSA) countries, which are low-income countries. To assess the relationship between trend shocks and economic development as a whole, we also consider a set of high-income developed countries.

Economic growth is the key for the development of the least poor countries around the world, which are mainly localized in the SSA region. A substantial literature has emphasized the crucial consequences of the average of long-run growth rate for economic prosperity, e.g., Barro and Sala-i-Martin (2003). Our results suggest that the volatility of this long-run growth rate is also important because it seems to be at the origin of the excess volatility of these economies and, therefore, the source of the high welfare costs of fluctuations identified by Loayza et al. (2007) and Pallage and Robe (2003). This conclusion is based on the extension of the work of Aguiar and Gopinath (2007) on emerging countries to a larger sample of countries that includes the lowest developed countries from SSA. Trend shocks have a broad interpretation. Our empirical results call for further theoretical researchers to establish the links between these shocks and the quality of institutions and the size of the domestic credit sector, which are significantly correlated with the size of the random walk across countries.