Volatility and Growth in Latin America: An Episodic Approach

December 1, 2006

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Format: Chicago

Ratna Sahay, and Rishi Goyal. Volatility and Growth in Latin America: An Episodic Approach, (USA: International Monetary Fund, 2006) accessed September 19, 2024

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 the pattern of macroeconomic volatility in 17 Latin American countries during episodes of high and low growth since 1970, examining in particular the role of policy volatility. Macroeconomic outcomes are distinguished from macroeconomic policies, structural reforms and reversals, shocks, and institutional constraints. Based on previous work, a composite measure of structural reforms is constructed for the 1970-2004 period. We find that outcomes and policies are more volatile in low growth episodes, while shocks (except U.S. interest rates) are similar across episodes. Fiscal policy volatility is associated with lower growth, but fiscal policy procyclicality is not. Low levels of market-oriented reforms and structural reform reversals are also associated with lower growth.

Subject: Currency crises, Exchange rate arrangements, Financial crises, Financial services, Fiscal policy, Foreign exchange, Macrostructural analysis, Real interest rates, Structural reforms

Keywords: Composite index, Country authorities, Country case studies, Country policy, Currency crises, Episodic Approach, Exchange rate, Exchange rate arrangements, Global, Growth, Latin America, Latin American country, Long-run growth performance, Real interest rate, Real interest rates, Simple average, Structural Reforms, Terms of trade, Volatility, WP

Publication Details

Pages:

52
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2006/287
Stock No:

WPIEA2006287
ISBN:

9781451865479
ISSN:

1018-5941

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