The link between ex post discrete shocks and private investment have never been formally tested in a panel data context, while the evidence of a link between ex ante commodity price uncertainty and investment is weak. This paper constructs measures of discrete shocks and uncertainty using a new...

Commodity export price uncertainty is typically measured as the standard deviation of the terms of trade, but this approach encounters at least three objections. First, terms of trade indices are unsuitable as proxies for commodity price movements per se. Secondly, the shortness of terms of...

Not surprisingly, extreme negative export price shocks reduce growth. But these adverse effects can be mitigated through offsetting increases in aid. Indeed, targeting aid to countries experiencing negative shocks appears to be even more important for aid effectiveness than targeting aid to...