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Incertidumbre Externa sobre la Economía Chilena

  • Yan Carrière-Swallow
  • Carlos A. Medel V.

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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File URL: http://www.bcentral.cl/eng/studies/economia-chilena/2011/dec/recv14n3dic2011pp75-82.pdf
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Article provided by Central Bank of Chile in its journal Economía Chilena: Notas de Investigación Técnica.

Volume (Year): 14 (2011)
Issue (Month): 3 (December)
Pages: 75-82

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Handle: RePEc:chb:bcchni:v:14:y:2011:i:3:p:75-82
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  1. Avinash Dixit, 1992. "Investment and Hysteresis," Journal of Economic Perspectives, American Economic Association, vol. 6(1), pages 107-132, Winter.
  2. Nicholas Bloom & Max Floetotto & Nir Jaimovich & Itay Saporta-Eksten & Stephen J. Terry, 2012. "Really Uncertain Business Cycles," NBER Working Papers 18245, National Bureau of Economic Research, Inc.
  3. Nick Bloom & Stephen Bond & John Van Reenen, 2007. "Uncertainty and Investment Dynamics," Review of Economic Studies, Oxford University Press, vol. 74(2), pages 391-415.
  4. repec:bla:restud:v:74:y:2007:i:2:p:391-415 is not listed on IDEAS
  5. Carrière-Swallow, Yan & Medel, Carlos, 2011. "Incertidumbre Global sobre el Pacífico Sur," Working Papers 2011-016, Banco Central de Reserva del Perú.
  6. Nicholas Bloom, 2007. "The Impact of Uncertainty Shocks," NBER Working Papers 13385, National Bureau of Economic Research, Inc.
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