Macroeconomic fluctuations are much stronger in developing countries than in the United States. Yet, while a large literature debates the welfare cost of economic fluctuations in the US, it remains an open question how large that cost is in developing countries. Using several models, we provide...

We document the real business cycle properties of foreign aid to poor countries. We show that aid exhibits the following empirical regularities over a twenty-five year period. First, it represents a significant source of income for the recipients. Second, it is very volatile--two to three times...

In this paper, we document empirical regularities in the foreign aid flows to developing countries over the last three decades. In spite of a large body of literature on foreign aid and its impact on recipients, surprisingly little is known about its business cycle characteristics. We show that,...

Are business cycles different according to the exchange rate regime? Baxter & Stockman have inconclusive results. We reinvestigate this question with more recent data and a different methodology and find evidence, for some aggregates, that their business cycle behavior has changed. We then try...