Large strongFluctuationsstrong in Consumption in Least Developed Countries.pdf

INSTITUTE OF DEVELOPING ECONOMIES IDE Discussion Papers are preliminary materials circulated to stimulate discussions and critical comments IDE DISCUSSION PAPER No. 227 Large Fluctuations in Consumption in Least Developed Countries Masahiro Kodama* Abstract The objective of this paper is to shed light on mechanism which increases fluctuation in consumption of least developed countries. In general large fluctuation in consumption makes consumers worse off. This fact suggests that accumulation of knowledge on the generating mechanism of the large consumption fluctuation very likely contributes to welfare improvement of the least developed countries, through policies stabilizing consumption. We specifically investigated the fluctuation in consumption, through the numerical analysis with a dynamic macroeconomic model. Keywords: consumption, LDC JEL classification: E21; E32; F41 * Research Fellow, International Economics Studies Group, Development Studies Center, IDE ( mkodama@ide.go.jp) 1 The Institute of Developing Economies (IDE) is a semigovernmental, nonpartisan, nonprofit research institute, founded in 1958. The Institute merged with the Japan External Trade Organization (JETRO) on July 1, 1998. The Institute conducts basic and comprehensive studies on economic and related affairs in all developing countries and regions, including Asia, the Middle East, Africa, Latin America, Oceania, and Eastern Europe. The views expressed in this publication are those of the author(s). Publication does not imply endorsement by the Institute of Developing Economies of any of the views expressed within. INSTITUTE OF DEVELOPING ECONOMIES (IDE), JETRO 3-2-2, WAKABA, MIHAMA-