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Trade linkages and growth in Latin America: An SVAR analysis

Listed author(s):
  • Miguel Ángel Saldarriaga
  • Diego Winkelried

How do shocks originated in large economies around the globe have transmitted to the growth rates of Latin American countries? To answer this question, we propose a highly parsimonious structural VAR model, identified through bilateral trade linkages .Since trade weights evolve through time, the effects of shocks are time-varying and we are able to quantify how growth in the region has been affected by tighter trading linkages with fast-growing emerging economies, and how it has responded to a new world trade structure, featuring China as a major player. It is found that about half of the vigourous growth registered in Latin American countries by the end of the 2000s can be attributed to direct and especially indirect multiplier effects induced by the spectacular growth of the Chinese economy.

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File URL: http://www.sciencedirect.com/science/journal/21107017/135
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Article provided by CEPII research center in its journal International Economics.

Volume (Year): (2013)
Issue (Month): 135-136 ()
Pages: 13-28

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Handle: RePEc:cii:cepiie:2013-q3-4-135-136-2
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  1. Tilak Abeysinghe & Kristin Forbes, 2005. "Trade Linkages and Output-Multiplier Effects: a Structural VAR Approach with a Focus on Asia," Review of International Economics, Wiley Blackwell, vol. 13(2), pages 356-375, 05.
  2. Alessandro Rebucci & Ambrogio Cesa-Bianchi & M. Hashem Pesaran & TengTeng Xu, 2012. "China's Emergence in the World Economy and Business Cycles in Latin America," ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, vol. 0(Spring 20), pages 1-75, January.
  3. Mutl, Jan, 2009. "Consistent Estimation of Global VAR Models," Economics Series 234, Institute for Advanced Studies.
  4. Abeysinghe, Tilak, 2001. "Estimation of direct and indirect impact of oil price on growth," Economics Letters, Elsevier, vol. 73(2), pages 147-153, November.
  5. Gulasekaran Rajaguru & Tilak Abeysinghe, 2004. "Quarterly real GDP estimates for China and ASEAN4 with a forecast evaluation," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 23(6), pages 431-447.
  6. Ambrogio Cesa-Bianchi & M. Hashem Pesaran & Alessandro Rebucci & TengTeng Xu, 2011. "China's Emergence in the World Economy and Business Cycles in Latin America," IDB Publications (Working Papers) 3739, Inter-American Development Bank.
  7. Diego Winkelried, 2014. "Exchange rate pass-through and inflation targeting in Peru," Empirical Economics, Springer, vol. 46(4), pages 1181-1196, June.
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