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Economic Volatility and Inequality: Do Aid and Remittances Matter?

Listed author(s):
  • Lisa CHAUVET

    (IRD-DIAL)

  • Marin FERRY

    (FERDI)

  • Patrick GUILLAUMONT

    ()

    (Ferdi)

  • Sylviane GUILLAUMONT JEANNENEY

    (Ferdi)

  • Sampawende J.-A. TAPSOBA

    (Fonds Monétaire international)

  • Laurent WAGNER

    ()

    (Ferdi)

We examine the adverse impact of macroeconomic volatility on inequality and the role that aid and remittances could play in mitigating this effect. Using a panel of 142 countries over 1973-2012, we find that macroeconomic volatility has an adverse impact on economic inequality and that the poorest are the most exposed to these fluctuations. However, while aid and remittances do not seem to have a clear direct impact on inequality, we find robust evidence that aid helps to dampen the negative effects of volatility on the distribution of income, while remittances do not.Keywords: Aid, Income volatility, Inequality

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File URL: http://www.ferdi.fr/sites/www.ferdi.fr/files/publication/fichiers/wp158_ferdi-_aid_income_volatility_and_inequality.pdf
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Paper provided by FERDI in its series Working Papers with number P158.

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Date of creation: Jul 2016
Handle: RePEc:fdi:wpaper:3083
Contact details of provider: Phone: +33473177542
Web page: http://ferdi.fr/

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  1. Rapoport, Hillel & Docquier, Frederic, 2006. "The Economics of Migrants' Remittances," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
  2. Pallage, Stephane & Robe, Michel A, 2001. "Foreign Aid and the Business Cycle," Review of International Economics, Wiley Blackwell, vol. 9(4), pages 641-672, November.
  3. Patrick Guillaumont & Lisa Chauvet, 2008. "Aid, Volatility and Growth Again. When Aid Volatility Matters and When It Does Not," Post-Print hal-00333047, HAL.
  4. Breen, R. & Garcia-Penalosa, C., 1999. "Income Inequality and Macroeconomic Volatility: an Empirical Investigation," Economics Papers 1999-w20, Economics Group, Nuffield College, University of Oxford.
  5. P. Guillaumont & L. Chauvet, 2001. "Aid and Performance: A Reassessment," Journal of Development Studies, Taylor & Francis Journals, vol. 37(6), pages 66-92.
  6. Maëlan LE GOFF & Christian EBEKE, 2009. "Why Migrants' Remittances Reduce Income Inequality in some Countries and not in Others?," Working Papers 200919, CERDI.
  7. Chen, Shaohua & Ravallion, Martin, 2008. "The developing world is poorer than we thought, but no less successful in the fight against poverty," Policy Research Working Paper Series 4703, The World Bank.
  8. Sylviane Guillaumont Jeanneney & Kangni R Kpodar, 2008. "Financial Development and Poverty Reduction; Can There Be a Benefit Without a Cost?," IMF Working Papers 08/62, .
  9. Garey Ramey & Valerie A. Ramey, 1994. "Cross-Country Evidence on the Link Between Volatility and Growth," NBER Working Papers 4959, National Bureau of Economic Research, Inc.
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  11. Sylviane Guillaumont Jeanneney & Kangni Kpodar, 2011. "Financial Development and Poverty Reduction: Can There be a Benefit without a Cost?," Post-Print halshs-00554229, HAL.
  12. Maëlan LE GOFF, 2010. "How Remittances Contribute to Poverty Reduction: a Stabilizing Effect," Working Papers 201008, CERDI.
  13. Patrick Guillaumont & Laurent Wagner, 2012. "Aid and Growth Accelerations: Vulnerability Matters," Post-Print halshs-00692388, HAL.
  14. Sylviane Guillaumont Jeanneney & Kangni Kpodar, 2011. "Financial Development and Poverty Reduction: Can There Be a Benefit Without a Cost?," Post-Print halshs-00601306, HAL.
  15. Combes, Jean-Louis & Ebeke, Christian Hubert & Etoundi, Sabine Mireille Ntsama & Yogo, Thierry Urbain, 2014. "Are Remittances and Foreign Aid a Hedge Against Food Price Shocks in Developing Countries?," World Development, Elsevier, vol. 54(C), pages 81-98.
  16. Boone, Peter, 1996. "Politics and the effectiveness of foreign aid," European Economic Review, Elsevier, vol. 40(2), pages 289-329, February.
  17. repec:dau:papers:123456789/5400 is not listed on IDEAS
  18. Bulir, Ales & Hamann, A. Javier, 2001. "How Volatile and Unpredictable are Aid Flows, and What are the Policy Implications?," WIDER Working Paper Series 143, World Institute for Development Economic Research (UNU-WIDER).
  19. Andrea Brandolini & Anthony B. Atkinson, 2001. "Promise and Pitfalls in the Use of "Secondary" Data-Sets: Income Inequality in OECD Countries As a Case Study," Journal of Economic Literature, American Economic Association, vol. 39(3), pages 771-799, September.
  20. Raddatz, Claudio, 2007. "Are external shocks responsible for the instability of output in low-income countries?," Journal of Development Economics, Elsevier, vol. 84(1), pages 155-187, September.
  21. Stefan C. Norrbin & F. Pinar Yigit, 2005. "The Robustness of the Link between Volatility and Growth of Output," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 141(2), pages 343-356, July.
  22. A. B. Atkinson & A. Brandolini, 2009. "On data: a case study of the evolution of income inequality across time and across countries," Cambridge Journal of Economics, Oxford University Press, vol. 33(3), pages 381-404, May.
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  24. Barham, Bradford & Boucher, Stephen, 1998. "Migration, remittances, and inequality: estimating the net effects of migration on income distribution," Journal of Development Economics, Elsevier, vol. 55(2), pages 307-331, April.
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