Are Business Cycles Different in Asia and Latin America?

ByWilly A Hoffmaister, Jorge Roldos

January 1, 1997

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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 compares business cycles in Asia and in Latin America using structural vector autoregression analysis with panel data. The evidence for countries in these regions suggests that (i) the main source of output fluctuations is supply shocks, even in the short run; (ii) the real exchange rate is driven mostly by fiscal shocks; and (iii) terms of trade shocks are important for trade balance fluctuations but not for output or real exchange rate fluctuations. However, in Latin America, as opposed to Asia, output is affected more by external and domestic demand shocks.

Subject: Economic theory, Exchange rates, Foreign exchange, International trade, Real exchange rates, Supply shocks, Terms of trade, Trade balance

Keywords: Asia and Pacific, Exchange rates, interest rate, movements in Latin America, nominal exchange rate, open economy, price level, real exchange rate, Real exchange rates, Supply shocks, Terms of trade, terms of trade shock, Trade balance, trade balance movement, world interest rate shock, WP

Pages:
49
Volume:
1997
DOI:
https://doi.org/10.5089/9781451927313.001
Issue:
009
Series:
Working Paper No. 1997/009
Stock No:
WPIEA0091997
ISBN:
9781451927313
ISSN:
1018-5941

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Notes

This paper was prepared for the first conference of the Latin American and Caribbean Economic Association (October 17-19, 1996, Mexico City, Mexico).

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