Central America's Regional Trends and U.S. Cycles
AbstractThe economies of Central America share a close relationship with the United States, with considerable comovement of GDP growth over a long period of time. Trade, the financial sector, and remittance flows are all potential channels through which the U.S. cycle could affect the region. But just how dependent is growth in the region on the U.S.? Using the common cycles method of Vahid and Engle (1993), this paper suggests that the business cycle is dominated by the U.S.; region-specific growth drivers tend to be long-lasting shocks, rather than temporary fluctuations. The most cyclically sensitive countries include Costa Rica, El Salvador, and Honduras.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 08/50.
Date of creation: 01 Feb 2008
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-03-25 (All new papers)
- NEP-FDG-2008-03-25 (Financial Development & Growth)
- NEP-MAC-2008-03-25 (Macroeconomics)
- NEP-OPM-2008-03-25 (Open Economy Macroeconomic)
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- Yan Sun & Wendell A. Samuel, 2009. "ECCU Business Cycles: Impact of the U.S," IMF Working Papers 09/71, International Monetary Fund.
- Gould, David & Loening, Josef L., 2008. "Central America's Macroeconomic Environment and the Role of the Investment Climate under Free Trade," MPRA Paper 25896, University Library of Munich, Germany.
- Magnusson, Kristin, 2009. "The Impact of U.S. Regional Business Cycles on Remittances to Latin America," Working Paper Series in Economics and Finance 710, Stockholm School of Economics.
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