Zooming In : From Aggregate Volatility to Income Distribution

In contrast with a growing literature on the drivers of aggregate volatility in developing countries, its consequences in terms of individual incomes have received less attention. This paper looks at the impact of cyclical output fluctuations and extreme output events (crises) on unemployment, poverty, and inequality. The authors find robust evidence that aggregate volatility has a regressive, asymmetric, and non linear impact, as reflected in the strong influence of extreme output drops. The findings show that, in addition to the mitigating role of personal wealth, public expenditure and labor protection exert a similar benign effect. These findings are in line with the income substitutions view of social safety nets, and cast a new light on the value of social programs and labor market regulation in crisis prone developing countries.

Bibliographic Details

Main Authors:	Calderón, César, Yeyati, Eduardo Levy
Format:	Policy Research Working Paper biblioteca
Language:	English
Published:	2009-04-01
Subjects:	ADVERSE CONSEQUENCES, ADVERSE EFFECT, ADVERSE EFFECTS, AGGREGATE OUTPUT, AGGREGATE VOLATILITY, AMERICAN DEVELOPMENT BANK, AMERICAN ECONOMIC REVIEW, ANNUAL GROWTH, ANNUAL GROWTH RATE, ATM, AVERAGE ANNUAL, AVERAGE INEQUALITY, BALANCE OF PAYMENT, BAND-PASS FILTER, BOND, BUSINESS CYCLE, BUSINESS CYCLES, CALCULATION, CALCULATIONS, CENTRAL BANK, COMMODITY, COMMODITY PRICES, COUNTRY CHARACTERISTICS, CRISIS VOLATILITY, CURRENCY, CURRENT ACCOUNT, CURRENT ACCOUNT BALANCES, CURRENT EXPENDITURE, CURRENT INCOME, CYCLICAL FLUCTUATIONS, CYCLICAL VOLATILITY, DEBT CRISIS, DEPENDENT VARIABLE, DEPOSIT, DEPOSIT INSURANCE, DEVALUATION, DEVELOPED COUNTRIES, DEVELOPING COUNTRIES, DEVELOPING ECONOMIES, DEVELOPMENT ECONOMICS, DISTRIBUTION DATA, DISTRIBUTION OF INCOME, DISTRIBUTIONAL EFFECTS, DYNAMIC PANEL, ECONOMETRICS, ECONOMIC ACTIVITY, ECONOMIC CONTRACTION, ECONOMIC CRISES, ECONOMIC CRISIS, ECONOMIC DEVELOPMENT, ECONOMIC DOWNTURN, ECONOMIC DOWNTURNS, ECONOMIC GROWTH, ECONOMIC INEQUALITY, ECONOMIC RECESSION, ECONOMIC SIZE, ECONOMIC STUDIES, ECONOMIC SURVEYS, EFFECT OF RECESSIONS, EFFECT OF VOLATILITY, EFFECTS OF VOLATILITY, EMERGING MARKET, EMPIRICAL EVIDENCE, EMPIRICAL STUDIES, EXCHANGE RATE, EXCHANGE RATE REGIME, EXCHANGE RATE REGIMES, EXCHANGE RATES, EXPLANATORY POWER, EXPORTS, EXPOSURE, EXTERNAL SHOCKS, FINANCIAL CRISES, FINANCIAL CRISIS, FINANCIAL DEPTH, FINANCIAL INSTRUMENTS, FINANCIAL INTEGRATION, FINANCIAL LIBERALIZATION, FINANCIAL SERVICES, FINANCIAL SYSTEM, FLEXIBLE EXCHANGE RATES, FLUCTUATIONS, FORECASTS, GDP, GDP PER CAPITA, GINI COEFFICIENT, GLOBALIZATION, GROWTH LITERATURE, GROWTH PRO-POOR, GROWTH RATE, GROWTH VOLATILITY, HIGH INCOME, HOUSEHOLD INCOME, HOUSEHOLD SIZE, HOUSEHOLD SPENDING, HUMAN CAPITAL, INCOME, INCOME DISTRIBUTION, INCOME EFFECT, INCOME INEQUALITY, INCOME LEVEL, INCOME LEVELS, INCOME QUINTILES, INCOME SHARE, INCOME SHOCKS, INCOMES, INDIVIDUAL INCOMES, INDUSTRIAL ECONOMIES, INEQUALITY LINK, INFLATION, INFLATION RATE, INSTRUMENTAL VARIABLE ESTIMATION, INSURANCE, INTEREST RATE, INTEREST RATES, INTERNATIONAL CAPITAL, LABOR DEMAND, LABOR FORCE, LABOR MARKET, LABOR MARKETS, LAGGED DEPENDENT, LAGGED INEQUALITY, LARGE FIRMS, LESS DEVELOPED COUNTRIES, LEVEL OF EDUCATION, LIBERALIZATION, LINK BETWEEN VOLATILITY, LIQUIDITY, LOCAL CURRENCY, LOW INCOME, LOW INCOME HOUSEHOLDS, LOW-INCOME, LOW-INCOME COUNTRIES, MACRO VOLATILITY, MACROECONOMIC ADJUSTMENT, MACROECONOMIC FLUCTUATIONS, MACROECONOMIC SHOCKS, MACROECONOMIC VOLATILITY, MARKET FAILURE, MARKET REGULATION, MEASURES OF VOLATILITY, MIDDLE INCOME, MIDDLE INCOME COUNTRIES, MIDDLE-INCOME ECONOMIES, MINIMUM WAGES, NEGATIVE EFFECT, NEGATIVE IMPACT, NEGATIVE LINK, NEGATIVE SHOCK, NEGATIVE SHOCKS, OPEN ECONOMIES, OUTPUT, OUTPUT PER CAPITA, OUTPUT VOLATILITY, PENSIONS, PER CAPITA INCOME, PERSONAL WEALTH, POLICY DESIGN, POLICY IMPLICATIONS, POLICY RESEARCH, POLITICAL ECONOMY, POOR HOUSEHOLDS, POSITIVE CORRELATION, POVERTY GAP, POVERTY HEADCOUNT, POVERTY LINE, PROPORTIONAL IMPACT, PUBLIC DEBT, PUBLIC EXPENDITURE, PUBLIC SECTOR, PUBLIC SPENDING, REAL ASSETS, REAL GDP, REAL GROWTH, REAL GROWTH RATE, REAL INCOME, REAL INTEREST RATE, REAL OUTPUT, REAL WAGES, RECESSIONS, REGRESSION ANALYSIS, RELATIVE INCOME, RESEARCH ASSISTANCE, RISK AVERSION, SAVERS, SAVINGS, SECONDARY ENROLLMENT, SECONDARY SCHOOL, SMALL COUNTRIES, SOCIAL ASSISTANCE, SOCIAL EXCLUSION, SOCIAL SAFETY, SOCIAL SAFETY NET, SOCIAL SAFETY NETS, SOCIAL SECURITY, SOCIAL SECURITY BENEFITS, SOCIAL WELFARE, STANDARD DEVIATION, STANDARD ERRORS, TAX, TERMINATION, TOTAL OUTPUT, TRADE OPENNESS, TRADE SHOCKS, TURNOVER, UNEMPLOYMENT, VALUE ADDED, VOLATILE ECONOMIES, VOLATILE ENVIRONMENTS, VOLATILITY COEFFICIENT, VOLATILITY MEASURES, VOLATILITY OF TERMS OF TRADE SHOCKS, WAGE, WAGES, WEALTH, WORLD DEVELOPMENT INDICATORS, WORTH,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090406142645 http://hdl.handle.net/10986/4088
Tags:	Add Tag No Tags, Be the first to tag this record!