Macrofinancial Linkages and Growth at Risk in the Dominican Republic

Author/Editor:

Olga Bespalova ; Marina V Rousset

Publication Date:

November 13, 2019

Electronic Access:

Download PDF. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

This paper uses the Growth-at-Risk (GaR) methodology to examine how macrofinancial conditions affect the growth outlook and its probability distribution. Using this approach, we evaluate risks to GDP growth in the Dominican Republic using quarterly data for 1996-2018. We group macrofinancial conditions in five principal determinants, based on 32 indicators. The Dominican Republic’s growth distribution appears most vulnerable to negative shocks to domestic financial conditions, domestic leverage, domestic demand, and external demand, with additional repercussions from the external cost of borrowing in the longer run. Our findings show that domestic monetary policy plays a particularly important role in reducing growth vulnerabilities when the economy is weak.

Series:

Working Paper No. 19/246

Subject:

English

Publication Date:

November 13, 2019

ISBN/ISSN:

9781513519203/1018-5941

Stock No:

WPIEA2019246

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

19

Please address any questions about this title to publications@imf.org