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Measuring macroeconomic instability: a critical survey illustrated with exports series

Author

Listed:
  • Joel Cariolle

    (FERDI - Fondation pour les Etudes et Recherches sur le Développement International)

  • Michaël Goujon

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique)

Abstract

For at least 40 years, the analysis of the causes and consequences of macroeconomic instability has greatly deepened our understanding of the handicaps faced by developing countries. This concern on economic instability is evidenced by a broad spectrum of indicators, based on the deviation of observed values of a given economic aggregate from its reference or trend value. In general, the choice of this or that indicator is not discussed advocating that the resulting instability indicators are closely correlated. Focusing on measurements of instability in export revenue data for 134 countries from 1970 to 2005, this paper finds that this assertion may be true for variancebased indicators, measuring the average magnitude of deviations from the trend. However, great discrepancies may arise between different measures of the asymmetry or of the occurrence of extreme deviations around the trend when different trend computation methods are used. Our purpose is, therefore, to invite further discussions regarding the use of these indicators, and to highlight the different dimensions of instability, which have been so far unheeded by the economic literature.

Suggested Citation

  • Joel Cariolle & Michaël Goujon, 2015. "Measuring macroeconomic instability: a critical survey illustrated with exports series," Post-Print halshs-01273229, HAL.
    • Handle: RePEc:hal:journl:halshs-01273229
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    Cited by:

    1. Joël Cariolle & Petros G Sekeris, 2021. "How export shocks corrupt: theory and evidence," Working Papers hal-03164648, HAL.
    2. Godfrey Akileng & Eric Nzibonera & Micheal Mutegana, 2019. "The Influence of Foreign Exchange Volatility, Interest Rates on the Stock Performance of Uganda Securities Exchange," Journal of Finance and Investment Analysis, SCIENPRESS Ltd, vol. 8(2), pages 1-1.
    3. Joël CARIOLLE, 2014. "Corruption in Turbulent Times: a Response to Shocks?," Working Papers P106, FERDI.
    4. Joël CARIOLLE, 2016. "The voracity and scarcity effects of export booms and busts on bribery," Working Papers P146, FERDI.
    5. Joël Cariolle & Michaël Goujon & Patrick Guillaumont, 2016. "Has Structural Economic Vulnerability Decreased in Least Developed Countries? Lessons Drawn from Retrospective Indices," Journal of Development Studies, Taylor & Francis Journals, vol. 52(5), pages 591-606, May.
    6. Sosso Feindouno, 2019. "Improving the measurement of export instability in the Economic Vulnerability Index: A simple proposal," Post-Print hal-02167897, HAL.
    7. Viana, Jr., Dante Baiardo C. & Lourenço, Isabel & Black, Ervin L. & Martins, Orleans Silva, 2023. "Macroeconomic instability, institutions, and earnings management: An analysis in developed and emerging market countries," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 51(C).
    8. Apeti, Ablam Estel, 2023. "Household welfare in the digital age: Assessing the effect of mobile money on household consumption volatility in developing countries," World Development, Elsevier, vol. 161(C).
    9. Florian Léon, 2020. "Firm growth in developing countries: Driven by external shocks or internal characteristics?," Working Papers hal-03004383, HAL.
    10. Kwame Mireku & Ellen Animah Agyei & Daniel Domeher, 2017. "Trade openness and economic growth volatility: An empirical investigation," Cogent Economics & Finance, Taylor & Francis Journals, vol. 5(1), pages 1385438-138, January.
    11. Gaigné, Carl & Sanch-Maritan, Mathieu, 2019. "City size and the risk of being unemployed. Job pooling vs. job competition," Regional Science and Urban Economics, Elsevier, vol. 77(C), pages 222-238.
    12. Gnangnon, Sèna Kimm, 2018. "Impact of multilateral trade liberalization and aid for trade for productive capacity building on export revenue instability," Economic Analysis and Policy, Elsevier, vol. 58(C), pages 141-152.
    13. Gaies, Brahim & Goutte, Stéphane & Guesmi, Khaled, 2020. "Does financial globalization still spur growth in emerging and developing countries? Considering exchange rates," Research in International Business and Finance, Elsevier, vol. 52(C).
    14. Brahim Gaies & Stéphane Goutte & Khaled Guesmi, 2019. "Does Financial Globalization Still Spur Growth In Emerging And Developing Countries? Considering Exchange Rate Volatility'S Effects," Working Papers hal-01968082, HAL.
    15. Joël CARIOLLE, 2014. "Corruption in Turbulent Times: a Response to Shocks?," Working Papers P106, FERDI.
    16. Zeeshan Mustafa & Giuliano Vitali & Ray Huffaker & Maurizio Canavari, 2024. "A systematic review on price volatility in agriculture," Journal of Economic Surveys, Wiley Blackwell, vol. 38(1), pages 268-294, February.
    17. Brahim Gaies & Stéphane Goutte & Khaled Guesmi, 2019. "Does Financial Globalization Still Spur Growth In Developing Countries? Considering Exchange Rate Volatility," Working Papers halshs-02175361, HAL.
    18. Avom, Désiré & Kamguia, Brice & Ngameni, Joseph Pasky & Njangang, Henri, 2021. "How does terms of trade volatility affect macroeconomic volatility? The roles of financial development and institutions," International Economics, Elsevier, vol. 168(C), pages 98-114.
    19. Ablam Estel Apeti, 2022. "Household welfare in the digital age: Assessing the effect of mobile money on household consumption volatility in developing countries," Post-Print hal-03819779, HAL.
    20. Sosso Feindouno, 2019. "Improving the measurement of export instability in the Economic Vulnerability Index: A simple proposal," Economics Bulletin, AccessEcon, vol. 39(2), pages 1629-1638.
    21. Léon, Florian, 2023. "Public bank lending in Africa in times of crisis," Emerging Markets Review, Elsevier, vol. 55(C).

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