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Incertidumbre Global sobre la Economía Chilena

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  • Yan Carrière–Swallow
  • Carlos Medel

Abstract

In this paper we estimate the impact of global uncertainty shocks –identified as sudden jumps in U.S. stock market volatility– on certain sectors of the Chilean economy. Using a reduced-form VAR approach, we estimate that uncertainty shocks generate a fall in GDP of 1.7% with respect to trend, and a fall in domestic demand of 2.2% within three quarters. On the supply side, the sector in which activity falls most is construction (-4.0%), while the largest drops in demand occur in durable goods consumption (-7.0%) and investment in plant and equipment (-10.0%). These results are broadly consistent with the literature on investment under uncertainty with partial irreversibility, and provide preliminary evidence about possible mechanisms through which global uncertainty affects emerging markets, with corresponding implications for stabilization policy.

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Bibliographic Info

Paper provided by Central Bank of Chile in its series Working Papers Central Bank of Chile with number 647.

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Date of creation: Nov 2011
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Handle: RePEc:chb:bcchwp:647

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  1. repec:bla:restud:v:74:y:2007:i:2:p:391-415 is not listed on IDEAS
  2. Yan Carrière–Swallow & Carlos Medel, 2011. "Incertidumbre Global sobre la Economía Chilena," Working Papers Central Bank of Chile 647, Central Bank of Chile.
  3. Nick Bloom & John Van Reenen & Stephen Bond, 2006. "Uncertainty and Investment Dynamics," NBER Working Papers 12383, National Bureau of Economic Research, Inc.
  4. Nicholas Bloom, 2009. "The Impact of Uncertainty Shocks," Econometrica, Econometric Society, vol. 77(3), pages 623-685, 05.
  5. Nicholas Bloom & Max Floetotto & Nir Jaimovich & Itay Saporta-Eksten & Stephen Terry, 2013. "Really Uncertain Business Cycles," CEP Discussion Papers dp1195, Centre for Economic Performance, LSE.
  6. Avinash Dixit, 1992. "Investment and Hysteresis," Journal of Economic Perspectives, American Economic Association, vol. 6(1), pages 107-132, Winter.
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Cited by:
  1. Carrière-Swallow, Yan & Medel, Carlos, 2011. "Incertidumbre Global sobre el Pacífico Sur," Working Papers 2011-016, Banco Central de Reserva del Perú.
  2. Luis Ceballos S. & Mario González F., 2012. "Indicador de Condiciones Económicas," Notas de Investigación Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 15(1), pages 105-117, April.

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