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Central America's Regional Trends and U.S. Cycles

Author/Editor: Roache, Shaun K.
Authorized for Distribution: February 1, 2008
Electronic Access: Free Full Text (PDF file size is 698KB)
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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: The economies of Central America share a close relationship with the United States, with considerable comovement of GDP growth over a long period of time. Trade, the financial sector, and remittance flows are all potential channels through which the U.S. cycle could affect the region. But just how dependent is growth in the region on the U.S.? Using the common cycles method of Vahid and Engle (1993), this paper suggests that the business cycle is dominated by the U.S.; region-specific growth drivers tend to be long-lasting shocks, rather than temporary fluctuations. The most cyclically sensitive countries include Costa Rica, El Salvador, and Honduras.
 
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Series: Working Paper No. 08/50
Subject(s): Economic integration | Central America | Costa Rica | El Salvador | Honduras | Trade | United States | Financial sector | Salary remittances
Author's keyword(s): business fluctuations | cycles | linkages
 
English  
    Published:   February 1, 2008        
            Format:   Paper
    Stock No:   WPIEA2008050   Pages:   30
    Price:   US$18.00 (Academic Rate: US$18.00 )
       
     
Please address any questions about this title to publications@imf.org.