IDEAS home Printed from https://ideas.repec.org/p/csa/wpaper/2003-12.html
   My bibliography  Save this paper

Growth and Shocks: evidence from rural Ethiopia

Author

Listed:
  • Stefan Dercon

Abstract

Using panel data from villages in rural Ethiopia, the paper studies the determinants of consumption growth (1989-97), based on a microgrowth model, controlling for heterogeneity. Consumption grew substantially, but with diverse experiences across villages and individuals. A key focus is on whether shocks affect growth. Rainfall shocks have a substantial impact on consumption growth, and its impact presists for many years. There also appears to be a significant, persistent growth impact from the largescale famine in the 1980s, as well as substantial externalities from the presence of road infrastructure. The findings related to the persistent effects of rainfall shocks and the famine crisis imply that welfare losses due to the lack of insurance and protection measures are well beyond the welfare cost of short term consumption fluctuations.

Suggested Citation

  • Stefan Dercon, 2003. "Growth and Shocks: evidence from rural Ethiopia," CSAE Working Paper Series 2003-12, Centre for the Study of African Economies, University of Oxford.
    • Handle: RePEc:csa:wpaper:2003-12
    as

    Download full text from publisher

    File URL: https://ora.ox.ac.uk/objects/uuid:920ff6a9-1398-41a2-8af2-a95799368522
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Klaus Deininger & John Okidi, 2003. "Growth and Poverty Reduction in Uganda, 1999-2000: Panel Data Evidence," Development Policy Review, Overseas Development Institute, vol. 21, pages 481-509, July.
    3. Stefan Dercon & Pramila Krishnan, 1996. "Income portfolios in rural Ethiopia and Tanzania: Choices and constraints," Journal of Development Studies, Taylor & Francis Journals, vol. 32(6), pages 850-875.
    4. Chris Elbers & Jan Willem Gunning & Bill Kinsey, 2007. "Growth and Risk: Methodology and Micro Evidence," The World Bank Economic Review, World Bank, vol. 21(1), pages 1-20.
    5. Robert M. Townsend, 1995. "Consumption Insurance: An Evaluation of Risk-Bearing Systems in Low-Income Economies," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 83-102, Summer.
    6. Rosenzweig, Mark R & Wolpin, Kenneth I, 1993. "Credit Market Constraints, Consumption Smoothing, and the Accumulation of Durable Production Assets in Low-Income Countries: Investment in Bullocks in India," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 223-244, April.
    7. Jalan, Jyotsna & Ravallion, Martin, 1998. "Are there dynamic gains from a poor-area development program?," Journal of Public Economics, Elsevier, vol. 67(1), pages 65-85, January.
    8. Philippe De Vreyer & Javier Herrera & Sandrine Mesplé-Somps, 2002. "Consumption growth and spatial poverty traps: an analysis of the effects of social services and community infrastructures on living standards in rural Peru," Working Papers DT/2002/17, DIAL (Développement, Institutions et Mondialisation), revised Oct 2003.
    9. Durlauf, Steven N. & Quah, Danny T., 1999. "The new empirics of economic growth," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 4, pages 235-308, Elsevier.
    10. Acemoglu, Daron & Zilibotti, Fabrizio, 1997. "Was Prometheus Unbound by Chance? Risk, Diversification, and Growth," Journal of Political Economy, University of Chicago Press, vol. 105(4), pages 709-751, August.
    11. John Y. Campbell & N. Gregory Mankiw, 1987. "Are Output Fluctuations Transitory?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 102(4), pages 857-880.
    12. Lokshin, Michael & Ravallion, Martin, 2000. "Short-lived shocks with long-lived impacts? - household income dynamics in a transition economy," Policy Research Working Paper Series 2459, The World Bank.
    13. Hausman, Jerry A & Taylor, William E, 1981. "Panel Data and Unobservable Individual Effects," Econometrica, Econometric Society, vol. 49(6), pages 1377-1398, November.
    14. Jalan, Jyotsna & Ravallion, Martin, 2001. "Household income dynamics in rural China," Policy Research Working Paper Series 2706, The World Bank.
    15. Banerjee, Abhijit V & Newman, Andrew F, 1993. "Occupational Choice and the Process of Development," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 274-298, April.
    16. Harold Alderman & Jere R. Behrman & Victor Lavy & Rekha Menon, 2001. "Child Health and School Enrollment: A Longitudinal Analysis," Journal of Human Resources, University of Wisconsin Press, vol. 36(1), pages 185-205.
    17. Stefan Dercon & Pramila Krishnan, 2003. "Risk Sharing and Public Transfers," Economic Journal, Royal Economic Society, vol. 113(486), pages 86-94, March.
    18. Jayne, Thomas S. & Strauss, John & Yamano, Takashi & Molla, Daniel, 2002. "Targeting of food aid in rural Ethiopia: chronic need or inertia?," Journal of Development Economics, Elsevier, vol. 68(2), pages 247-288, August.
    19. Holtz-Eakin, Douglas & Newey, Whitney & Rosen, Harvey S, 1988. "Estimating Vector Autoregressions with Panel Data," Econometrica, Econometric Society, vol. 56(6), pages 1371-1395, November.
    20. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 407-437.
    21. Jan Willem Gunning & John Hoddinott & Bill Kinsey & Trudy Owens, 1999. "Revisiting forever gained: income dynamics in the resettlement areas of Zimbabwe," CSAE Working Paper Series 1999-14, Centre for the Study of African Economies, University of Oxford.
    22. Hoddinott, John & Kinsey, Bill, 2001. "Child Growth in the Time of Drought," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(4), pages 409-436, September.
    23. Rosenzweig, Mark R & Binswanger, Hans P, 1993. "Wealth, Weather Risk and the Composition and Profitability of Agricultural Investments," Economic Journal, Royal Economic Society, vol. 103(416), pages 56-78, January.
    24. Lipton, Michael & Ravallion, Martin, 1995. "Poverty and policy," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 41, pages 2551-2657, Elsevier.
    25. Jalan, Jyotsna & Ravallion, Martin, 1997. "Spatial poverty traps?," Policy Research Working Paper Series 1862, The World Bank.
    26. Stefan Dercon & Pramila Krishnan, 2000. "Vulnerability, seasonality and poverty in Ethiopia," Journal of Development Studies, Taylor & Francis Journals, vol. 36(6), pages 25-53.
    27. Stefan Dercon, 2002. "The Impact of Economic Reforms in Rural Households in Ethiopia : A Study from 1989 to 1995," World Bank Publications - Books, The World Bank Group, number 13980, December.
    28. Stefan Dercon, 1995. "On market integration and liberalisation: Method and application to Ethiopia," Journal of Development Studies, Taylor & Francis Journals, vol. 32(1), pages 112-143.
    29. Jonathan Temple, 1999. "The New Growth Evidence," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 112-156, March.
    30. Jonathan Morduch, 1995. "Income Smoothing and Consumption Smoothing," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 103-114, Summer.
    31. Webb, Patrick & von Braun, Joachim & Yohannes, Yisehac, 1992. "Famine in Ethiopia: policy implications of coping failure at national and household levels," Research reports 92, International Food Policy Research Institute (IFPRI).
    32. Jyotsna Jalan & Martin Ravallion, 1998. "Geographic Poverty Traps?," Boston University - Institute for Economic Development 86, Boston University, Institute for Economic Development.
    33. Ravallion, Martin & Jalan, Jyotsna, 1996. "Growth divergence due to spatial externalities," Economics Letters, Elsevier, vol. 53(2), pages 227-232, November.
    34. Nazrul Islam, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(4), pages 1127-1170.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dercon, Stefan, 2004. "Growth and shocks: evidence from rural Ethiopia," Journal of Development Economics, Elsevier, vol. 74(2), pages 309-329, August.

    More about this item

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:csa:wpaper:2003-12. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Julia Coffey (email available below). General contact details of provider: https://edirc.repec.org/data/csaoxuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.