Title: Are external shocks responsible for the instability of output in low income countries?
Description: "External shocks, such as commodity price fluctuations, natural disasters, and the role of the international economy, are often blamed for the poor economic performance of low-income countries.  The author quantifies the impact of these different external shocks using a panel vector autoregression (VAR) approach and compares their relative contributions to output volatility in low-income countries vis-&agrave;-vis internal factors.  He finds that external shocks can only explain a small fraction of the output variance of a typical low-income country.  Internal factors are the main source of fluctuations.  From a quantitative perspective, the output effect of external shocks is typically small in absolute terms, but significant relative to the historic performance of these countries. "--World Bank web site.
Subjects: Business cycles, Industrial productivity
Places: Developing countries