Aid, volatility, and growth again : when aid volatility matters and when it does not
Chauvet, Lisa; Guillaumont, Patrick (2009), Aid, volatility, and growth again : when aid volatility matters and when it does not, Review of development economics, 13, 3, p. 452-463. http://dx.doi.org/10.1111/j.1467-9361.2009.00501.x
TypeArticle accepté pour publication ou publié
Journal nameReview of development economics
MetadataShow full item record
Abstract (EN)In previous papers the authors have argued that aid is likely to mitigate the negative effects of external shocks on economic growth (i.e. that aid is more effective in countries which are more vulnerable to external shocks). Recently an important debate has emerged about the possible negative effects of aid volatility itself. However, the cushioning effect of aid may involve some volatility in aid flows, which then is not necessarily negative for growth. In this paper the authors examine to what extent the time profile of aid disbursements may contribute to an increase or a decrease of aid effectiveness. They first show that aid, even if volatile, is not clearly as pro-cyclical as is often argued, and, even if pro-cyclical, is not necessarily destabilizing. They measure aid volatility by several methods and assess pro-cyclicality of aid with respect to exports, thus departing from previous literature, which usually assess pro-cyclicality of aid with respect to national income or fiscal receipts. The stabilizing/destabilizing nature of aid is measured by the difference in the volatility of exports and the volatility of the aid plus export flows. Then, in order to take into account the diversity of shocks to which aid can respond, they consider the effect of aid on income volatility and again find that aid is making growth more stable, while its volatility reduces this effect. They finally show through growth regressions that the higher effectiveness of aid in vulnerable countries is to a large extent due to its stabilizing effect.
Subjects / Keywordsgrowth; aid volatility
Showing items related by title and author.
Chauvet, Lisa; Ferry, Marin; Guillaumont, Patrick; Guillaumont Jeanneney, Sylviane; Tapsoba, Sampawende J.-A.; Wagner, Laurent (2019) Article accepté pour publication ou publié
Aid, Remittances, Medical Brain Drain and Child Mortality: Evidence Using Inter and Intra-Country Data. Chauvet, Lisa; Gubert, Flore; Mesplé-Somps, Sandrine (2013) Article accepté pour publication ou publié
Are Remittances More Effective Than Aid to Reduce Child Mortality? An Empirical Assessment Using Inter and Intra-Country Data Chauvet, Lisa; Gubert, Flore; Mesplé-Somps, Sandrine (2010) Chapitre d'ouvrage