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Stylized Facts of International Business Cycle Relevant for the Chilean Economy

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  • Carlos García
  • Patricio Jaramillo
  • Jorge Selaive

Abstract

This paper presents stylized facts of international business cycle relevant for the Chilean economy. First, we analyze key empirical regularities in the business cycles of industrialized economies (US, Europe, and Japan). Second, we describe the interaction between these countries and their relationship with other variables such as commodities prices, capital flows and sovereign spreads. The results are the following: (i) US activity leads by two quarters the activity in Europe, Japan, and Latin America; (ii) we also find a high level of synchronization in both the inflationary processes and the monetary policies; (iii) GDP of industrialized countries leads movements in the copper and oil prices, while the Chinese economy presents a high contemporaneous correlation with the price of copper; (iv) US real exchange rate leads the price of commodities, and finally; (v) increases in capital flows to emerging markets and reductions in sovereign spreads lead economic growth in industrialized economies.

Suggested Citation

  • Carlos García & Patricio Jaramillo & Jorge Selaive, 2006. "Stylized Facts of International Business Cycle Relevant for the Chilean Economy," Working Papers Central Bank of Chile 392, Central Bank of Chile.
  • Handle: RePEc:chb:bcchwp:392
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    1. Jorge Enrique Restrepo & Claudio Soto, 2004. "Regularidades Empíricas de la Economía Chilena," Working Papers Central Bank of Chile 301, Central Bank of Chile.
    2. Hamilton, James D., 1996. "This is what happened to the oil price-macroeconomy relationship," Journal of Monetary Economics, Elsevier, vol. 38(2), pages 215-220, October.
    3. V. V Chari & Patrick J. Kehoe & Ellen R. McGrattan, 2002. "Can Sticky Price Models Generate Volatile and Persistent Real Exchange Rates?," Review of Economic Studies, Oxford University Press, vol. 69(3), pages 533-563.
    4. LeBlanc, Michael & Chinn, Menzie David, 2004. "Do High Oil Prices Presage Inflation? The Evidence from G-5 Countries," Santa Cruz Department of Economics, Working Paper Series qt4wt4m7hg, Department of Economics, UC Santa Cruz.
    5. Jorge Selaive C., 2006. "Premio Soberano: Efecto de Movimientos en las Tasas de Interés Internacionales," Notas de Investigación Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 9(2), pages 73-80, August.
    6. Eduardo Borensztein & Carmen M. Reinhart, 1994. "The Macroeconomic Determinants of Commodity Prices," IMF Staff Papers, Palgrave Macmillan, vol. 41(2), pages 236-261, June.
    7. Jonathan Heathcote & Fabrizio Perri, 2003. "Why Has the U.S. Economy Become Less Correlated with the Rest of the World?," American Economic Review, American Economic Association, vol. 93(2), pages 63-69, May.
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