Working Paper: CEPR ID: DP5516
Authors: Adeel Malik; Jonathan Temple
Abstract: This paper examines the structural determinants of output volatility in developing countries, and especially the roles of geography and institutions. We investigate the volatility effects of market access, climate variability, the geographic predisposition to trade, and various measures of institutional quality. We find an especially important role for market access: remote countries are more likely to have undiversified exports and to experience greater volatility in output growth. Our results are based on Bayesian methods that allow us to address formally the problem of model uncertainty and to examine robustness across a wide range of specifications.
Keywords: Bayesian model averaging; geography; institutions; volatility
JEL Codes: E30; O11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| geographic remoteness (R12) | increased output volatility (E32) |
| weak institutions (O17) | increased output volatility (E32) |
| geographic characteristics (R12) | output volatility (E23) |
| institutional quality (L15) | output volatility (E23) |