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Short Run Savings Fluctuations and Export Shocks. Theory and Evidence for Latin-America

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  • Juan Carlos Echeverry

Abstract

A basic theoretical model of a small open economy within the framework of intertemporal maximation is used to analyze the effects of nominal export shocks. The model helps in explaining the close relationschip that is found between export shocks and short run fluctuations of domestic savings in the major Latin-American economies. The savings/GDP ratio moves fairly closely with exports/GDP, indicating that individuals perceive almost all major changes in exports as transitory. An explanation is proposed for Colombia's fall in the savings rate during the 1990s, and the puzzling cases of Mexico and PEru during the 1980s. Exports volatility and prolonged overvaluation of the exchange rate are associated with savings rate volatility.

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Paper provided by Banco de la Republica de Colombia in its series Borradores de Economia with number 048.

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Handle: RePEc:bdr:borrec:048

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Cited by:
  1. Martha Misas & Carlos Esteban Posada, . "Determinantes de la Tasa de Ahorro: Una Perspectiva Internacional," Borradores de Economia, Banco de la Republica de Colombia 068, Banco de la Republica de Colombia.
  2. Carlos Esteban Posada, 1999. "Tasa de cambio real y consumo : teoria, evidencia y estudios del caso colombiano, 1950-1997," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, Universidad de Antioquia, Departamento de Economía, issue 51, pages 7-46, Julio Dic.

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