The Effect of External Conditions on Growth in Latin America
IMF Working Papers, July 1, 2007
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- The Effect of External Conditions on Growth in Latin America
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Bibliographic details
- Authors: Jeromin Zettelmeyer, Pär Österholm
- Published: July 1, 2007
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451867404.001
Research question and methodology
- Investigates the sensitivity of Latin American GDP growth to external developments.
- Uses a Bayesian VAR model with informative steady-state priors.
- Model estimation sample: quarterly data from 1994 to 2006 on key external and Latin American variables.
Main empirical findings
- 50 to 60 percent of the variation in Latin American GDP growth is accounted for by external shocks.
- Conditional forecasts indicate:
- Latin American growth is robust to moderate declines in commodity prices and U.S. or world growth.
- Latin American growth is sensitive to more extreme shocks, particularly a combined external slowdown and tightening of world financial conditions.
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- _wp07176 - References