Advanced Search
MyIDEAS: Login to save this paper or follow this series

Spillovers to Central America in Light of the Crisis

Contents:

Author Info

  • Andrew Swiston
Registered author(s):

    Abstract

    This paper investigates Central America''s external linkages over the last fifteen years of increased integration in light of the 2008-09 global recession. Using structural VAR models, it is found that a one percent shock to U.S. growth shifts economic activity in Central America by 0.7 to 1 percent, on average. Spillovers from global shocks and the rest of the region also affect activity in some countries. Spillovers are mostly transmitted through advanced country financial conditions and fluctuations in external demand for Central American exports. Shocks to advanced economies associated with the 2008-09 financial crisis lowered economic activity in the region by 4 to 5 percent, on average, accounting for a majority of the observed slowdown. The impact was almost twice as large as elasticities estimated on pre-crisis data would have predicted. These results underscore the importance of operating credible policy frameworks that enable a countercyclical policy response to external shocks.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=23591
    Download Restriction: no

    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 10/35.

    as in new window
    Length: 37
    Date of creation: 01 Feb 2010
    Date of revision:
    Handle: RePEc:imf:imfwpa:10/35

    Contact details of provider:
    Postal: International Monetary Fund, Washington, DC USA
    Phone: (202) 623-7000
    Fax: (202) 623-4661
    Email:
    Web page: http://www.imf.org/external/pubind.htm
    More information through EDIRC

    Order Information:
    Web: http://www.imf.org/external/pubs/pubs/ord_info.htm

    Related research

    Keywords: Spillovers; Capital flows; Economic growth; Economic models; External shocks; Global Financial Crisis 2008-2009; Trade integration; Workers remittances; real gdp; gdp growth; business cycles; business cycle; growth rates; economic integration; free trade; commodity prices; regional integration; business cycle synchronization; trading partners; global shocks; trade agreement; free trade agreement; domestic shocks; merchandise trade; international trade; global integration; growth rate; trade channels; trade intensity; trade links; trade in services; export share; free trade agreements; trade agreements; transmission of shocks; increasing integration; trade volume; domestic banks; equilibrium model; world trade; trading arrangements; export volumes; optimum currency areas; export shares; preferential trading arrangements; idiosyncratic factors; preferential trading; tradable goods; gdp deflator; net exports; regional trade; external financing; foreign ownership; business cycle variation; business cycle fluctuations; exchange rate policies;

    This paper has been announced in the following NEP Reports:

    References

    References listed on IDEAS
    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.:
    as in new window
    1. César Calderón & Alberto Chong & Ernesto H. Stein, 2003. "Trade Intensity and Business Cycle Synchronization: Are Developing Countries any Different?," Research Department Publications, Inter-American Development Bank, Research Department 4315, Inter-American Development Bank, Research Department.
    2. Connel Fullenkamp & Thomas F. Cosimano & Michael T. Gapen & Ralph Chami & Peter Montiel & Adolfo Barajas, 2008. "Macroeconomic Consequences of Remittances," IMF Occasional Papers 259, International Monetary Fund.
    3. Imbs, Jean, 2004. "The Real Effects of Financial Integration," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4335, C.E.P.R. Discussion Papers.
    4. Norbert Fiess, . "Business Cycle Synchronization and Regional Integration: A Case Study for Central America," Working Papers, Business School - Economics, University of Glasgow 2005_14, Business School - Economics, University of Glasgow.
    5. World Bank, 2005. "Global Economic Prospects 2006 : Economic Implications of Remittances and Migration," World Bank Publications, The World Bank, number 7306, August.
    6. Serdar Sayan, 2006. "Business Cycles and Workers' Remittances," IMF Working Papers 06/52, International Monetary Fund.
    7. Stefano Schiavo, 2008. "Financial Integration, GDP Correlation and the Endogeneity of Optimum Currency Areas," Sciences Po publications info:hdl:2441/9857, Sciences Po.
    8. Reinhart, Carmen & Reinhart, Vincent, 2008. "Capital Flow Bonanzas: An Encompassing View of the Past and Present," CEPR Discussion Papers, C.E.P.R. Discussion Papers 6996, C.E.P.R. Discussion Papers.
    9. Vahid, F & Engle, Robert F, 1993. "Common Trends and Common Cycles," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 8(4), pages 341-60, Oct.-Dec..
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Andrew Swiston, 2011. "Official Dollarization As a Monetary Regime," IMF Working Papers 11/129, International Monetary Fund.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:10/35. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jim Beardow) or (Hassan Zaidi).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.