External Linkages and Economic Growth in Colombia : Insights from A Bayesian VAR Model

Author/Editor:

Lisandro Abrego ; Pär Österholm

Publication Date:

February 1, 2008

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper investigates the sensitivity of Colombian GDP growth to the surroundingmacroeconomic environment. We estimate a Bayesian VAR model with informative steady-statepriors for the Colombian economy using quarterly data from 1995 to 2007. A variancedecomposition shows that world GDP growth and government spending are the most importantfactors, explaining roughly 17 and 16 percent of the variance in Colombian GDP growthrespectively. The model, which is shown to forecast well out-of-sample, can also be used toanalyse alternative scenarios. Generating both endogenous and conditional forecasts, we showthat the impact on Colombian GDP growth of a substantial downturn in world GDP growthwould be non-negligible but still a mild decline by historical standards.

Series:

Working Paper No. 08/46

Subject:

Frequency:

Biannually

English

Publication Date:

February 1, 2008

ISBN/ISSN:

9781451869088/1018-5941

Stock No:

WPIEA2008046

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

24

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