Open AccessDevelopment Aid, Economic Growth Volatility and Poverty Volatility in Developing Countries
Author(s) -
Sèna Kimm Gnang
Publication year - 2021
Publication title -
global business and economics anthology
Language(s) - English
Resource type - Journals
ISSN - 1553-1392
DOI - 10.47341/21121
Subject(s) - volatility (finance) , poverty , economics , developing country , development economics , monetary economics , econometrics , economic growth
This article has analysed the effect of development aid flows on poverty volatility in developing countries, including through the economic growth volatility channel. Using a sample of 106 countries over the period 1980-2017, and the two-step system Generalized Methods of Moment (GMM) technique, the analysis has shown that development aid flows dampen the positive poverty volatility effect of economic growth volatility: the magnitude of the negative effect of development aid on poverty volatility rises as the degree of economic growth volatility increases. Additionally, development aid exerts a higher negative effect on poverty volatility as countries face higher poverty rates. These findings highlight the importance of development aid for stabilizing poverty rates.