We develop a model of the political consequences of public income volatility. As is standard, political incentives … create inefficient policies, but we show that making income uncertain creates specific new effects. Future volatility reduces … policy less costly. We show how this model can help think about the connection between volatility and economic growth and in …

This paper studies the impact of aid volatility in a two-period model where production may occur with either a … modern technology to be used. The possibility of a poverty trap induced by high aid volatility is first examined in a …-period contingency fund) financed through taxation. An increase in aid volatility is shown to raise the optimal contingency fund. But if …