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The Cost of Volatile Investment in an Emerging Economy

Author

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  • Reinout De Bock

    (International Monetary Fund)

Abstract

I measure the welfare gains from eliminating fluctuations in investment in an emerging economy such as Argentina. The estimated welfare effects are an order of magnitude higher than those for the US and arise with moderate degrees of diminishing returns to investment.

Suggested Citation

  • Reinout De Bock, 2011. "The Cost of Volatile Investment in an Emerging Economy," Economics Bulletin, AccessEcon, vol. 31(2), pages 1696-1705.
    • Handle: RePEc:ebl:ecbull:eb-11-00297
    as

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    References listed on IDEAS

    as
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    5. Cole, Harold L. & Obstfeld, Maurice, 1991. "Commodity trade and international risk sharing : How much do financial markets matter?," Journal of Monetary Economics, Elsevier, vol. 28(1), pages 3-24, August.
    6. Reinout De Bock, 2012. "The Composition and Cyclical Behavior of Trade Flows in Emerging Economies," International Economics, CEPII research center, issue 132, pages 5-33.
    7. Gadi Barlevy, 2004. "The Cost of Business Cycles Under Endogenous Growth," American Economic Review, American Economic Association, vol. 94(4), pages 964-990, September.
    8. Neumeyer, Pablo A. & Perri, Fabrizio, 2005. "Business cycles in emerging economies: the role of interest rates," Journal of Monetary Economics, Elsevier, vol. 52(2), pages 345-380, March.
    9. Stephane Pallage & Michel A. Robe, 2003. "On the Welfare Cost of Economic Fluctuations in Developing Countries," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(2), pages 677-698, May.
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    More about this item

    Keywords

    Investment; Welfare costs; Emerging Economy; Growth; Argentina;
    All these keywords.

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • D6 - Microeconomics - - Welfare Economics

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