## The Sources of Macroeconomic Fluctuations in Developing Countries: Brazil and Korea

_IMF Working Papers, February 1, 1996_

## Source details

**Canonical URL:** [The Sources of Macroeconomic Fluctuations in Developing Countries: Brazil and Korea](https://www.imf.org/en/publications/wp/issues/2016/12/30/the-sources-of-macroeconomic-fluctuations-in-developing-countries-brazil-and-korea-1874)

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## Bibliographic details
- Authors: Jorge Roldos, Willy A Hoffmaister
- Published: February 1, 1996
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451922127.001

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### Overview
- Paper studies the sources of macroeconomic fluctuations in developing countries using a structural VAR approach.
- Identification uses long-run restrictions derived from a theoretical model of a small open economy encompassing a large number of macroeconomic paradigms; the short-run dynamics are unrestricted.
- Framework applied to Brazil and Korea.

### Methodology
- Structural VAR approach with:
  - Long-run restrictions from a theoretical small open economy model.
  - Unrestricted short-run dynamics.

### Key Findings
- Supply shocks are the main source of GDP fluctuations, even in the short run.
- Aggregate demand shocks:
  - Important in the short run in Brazil.
  - Not important in the short run in Korea.
- External shocks explain a small fraction of the variance of output.
- Real exchange rate is driven mainly by fiscal shocks.
- Nominal shocks appear to have little impact on output and the real exchange rate.

### Subjects and Keywords
- Subject: Economic theory, Fiscal policy, Foreign exchange, Inflation, Oil prices, Prices, Real exchange rates, Supply shocks
- Keywords: effects of adjustment program, exchange rate, exchange rate shock, Inflation, inflation rate, input price, Korea's output response, linear transformation, Oil prices, open economy, Real exchange rates, Supply shocks, WP

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/the-sources-of-macroeconomic-fluctuations-in-developing-countries-brazil-and-korea-1874_