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

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Author Info
Juan Carlos Echeverry

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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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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  3. Reinhart, Carmen & Reinhart, Vincent, 1991. "Output Fluctuations and Monetary Shocks: Evidence from Colombia," MPRA Paper 6980, University Library of Munich, Germany. [Downloadable!]
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  4. Reinhart, Carmen & Calvo, Guillermo & Vegh, Carlos, 1994. "La tasa de cambio real como meta de política: teoría y evidencia
    [Targeting the real exchange rate: Theory and evidence]    ," MPRA Paper 13468, University Library of Munich, Germany. [Downloadable!]
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  5. Jonathan David Ostry & Carmen Reinhart & Masao Ogaki, 1995. "Saving Behavior in Low- and Middle -Income Developing Countries: A Comparison," IMF Working Papers 95/3, International Monetary Fund.
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  6. Sebastian Edwards, 1995. "Why are Saving Rates so Different Across Countries?: An International Comparative Analysis," NBER Working Papers 5097, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. Backus, David K & Kehoe, Patrick J & Kydland, Finn E, 1994. "Dynamics of the Trade Balance and the Terms of Trade: The J-Curve?," American Economic Review, American Economic Association, vol. 84(1), pages 84-103, March. [Downloadable!] (restricted)
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  12. Reinhart, Carmen & Ostry, Jonathan, 1995. "El ahorro y 1a tasa de interes real en los paises en desarrollo
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  21. Christopher D. Carroll, 1992. "The Buffer-Stock Theory of Saving: Some Macroeconomic Evidence," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1992-2), pages 61-156. [Downloadable!]
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  25. Guillermo Calvo & Carlos A. Végh Gramont, 1990. "Interest Rate Targeting In A Small Open Economy: The Predetermined Exchange Rates Case," IMF Working Papers 90/21, International Monetary Fund.
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Martha Misas & Carlos Esteban Posada, 1997. "Determinantes De La Tasa De Ahorro: Una Perspectiva Internacional," BORRADORES DE ECONOMIA 002310, BANCO DE LA REPÚBLICA. [Downloadable!]
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