Large Fluctuations in Consumption in Least Developed Countries

The objective of this paper is to shed light on mechanism which increases fluctuationin consumption of least developed countries. In general large fluctuation inconsumption makes consumers worse off. This fact suggests that accumulation ofknowledge on the generating mechanism of the large consumption fluctuation verylikely contributes to welfare improvement of the least developed countries, throughpolicies stabilizing consumption. We specifically investigated the fluctuation in consumption, through the numerical analysis with a dynamic macroeconomic model.