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Business Cycles in Developing Countries: Are They Different?

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  • Rand, John
  • Tarp, Finn

Abstract

According to Lucas (1981) understanding business cycles is the first step in designing appropriate stabilization policies. In this paper, we demonstrate a series of ways in which developing countries differ from their developed counterparts when focus is on the nature and characteristics of macroeconomic fluctuations. Cycles are shorter, making it necessary to modify the filtering procedures normally applied for industrialized countries. This leads to different stylized facts of the business cycle across countries and regions, and the developing countries are more diverse than the rather uniform industrialized countries. Great care is therefore needed when the causal mechanisms in economic models are specified. A “one-size fits all” approach is unlikely to be appropriate.

Suggested Citation

  • Rand, John & Tarp, Finn, 2001. "Business Cycles in Developing Countries: Are They Different?," MPRA Paper 62445, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:62445
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    More about this item

    Keywords

    Developing countries; stabilization policies; macroeconomic fluctuations; business cycles;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O21 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy

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