Measuring macroeconomic instability: a critical survey illustrated with exports series

For at least 40 years, the analysis of the causes and consequences of macroeconomicinstability has greatly deepened our understanding of the handicaps faced by developing countries.This concern on economic instability is evidenced by a broad spectrum of indicators, based on thedeviation of observed values of a given economic aggregate from its reference or trend value. Ingeneral, the choice of this or that indicator is not discussed advocating that the resulting instabilityindicators are closely correlated. Focusing on measurements of instability in export revenue datafor 134 countries from 1970 to 2005, this paper finds that this assertion may be true for variancebasedindicators, measuring the average magnitude of deviations from the trend. However, greatdiscrepancies may arise between different measures of the asymmetry or of the occurrence of extremedeviations around the trend when different trend computation methods are used. Our purpose is,therefore, to invite further discussions regarding the use of these indicators, and to highlight thedifferent dimensions of instability, which have been so far unheeded by the economic literature