In this paper, we measure the welfare effects of banning child labor in an economy with strong idiosyncratic shocks to employment. We then design two different policies: an unemployment insurance program and a universal basic income system. We show that they can often lead to an endogenous...

Commodity-exporting countries have significantly benefited from the commodity price boom of recent years. At the current juncture, however, uncertain global economic prospects have raised questions about their vulnerability to a sharp fall in commodity prices and the policies that can shield it...

Trade and financial ties between low-income countries (LICs) and Brazil, Russia, India, and China (BRICs) have expanded rapidly in recent years. This gives rise to the potential for growth to spill over from the latter to the former. We employ a global vector autoregression (GVAR) model to...

Using the approach suggested by Gabaix (Econometrica 2011) this paper demonstrates that idiosyncratic shocks in the largest firms are important for an understanding of aggregate volatility in German manufacturing industries. The implications of this finding for theoretical and empirical research...

There is much interest in the causes of several adverse health outcomes in middle and old age. In searching for new explanations for adverse health outcomes later in life, researchers have started to look beyond behavioural risk factors to examine the effect of shocks to health in utero and in...

Can positive growth shocks from the faster-growing countries in Europe spill over to the slower growing countries, providing useful tailwinds to their recovery process? This study investigates the potential relevance of growth spillovers in the context of the crisis and the recovery process....

The ability of households to insure consumption from adverse shocks is an important aspect of vulnerability to poverty. How is consumption insurance achieved in a low-income setting where formal credit and insurance markets have been observed to be imperfect or missing? Using 2003 data from the...

This working paper combines the Parameterizing Expectations Approach developed by Marcet (1988) and Den Haan and Marcet (1990), and the approach proposed by Krusell and Smith (1998), to approximate the equilibrium of incomplete markets economies with aggregate uncertainty. The algorithm is...

A favorable external environment coupled with prudent policies fostered output growth in most of Latin America during the last decade. But, what were the drivers of this strong growth performance from the supply side and will this momentum be sustainable in the years ahead? We address these...

The “middle-income trap” is the phenomenon of hitherto rapidly growing economies stagnating at middle-income levels and failing to graduate into the ranks of high-income countries. In this study we examine the middle-income trap as a special case of growth slowdowns, which are identified as...