El ciclo económico en Uruguay - Un modelo de Switching Regimes

This paper presents an empirical characterization of Uruguayan’s Business Cycle applying the Switching Regime methodology; three scenarios were considered: recession, moderate growth and boom. The relation between regional and Uruguayan’s business cycle is analyzed through the same model; instead, in order to study the relation between the international and Uruguayan’ business cycle, a model proposed by Kim and Nelson (1999) based on the Hamilton’s original model (1989) is used to modelling the U.S. real GNP. The conditional probabilities of being in the three states at each point of the sample reproduce in a reasonable way the evolution of the economic activity in the period ; these probabilities have similar evolutions in Argentina and Uruguay. Likewise, only is able to observe a boom state in Uruguay if the U.S economy were in the fast growth state; also, the international recessions have a strong influence in the regional and local business cycle. Finally, some considerations are made related to the level of the GNP on the long run and the changes in the permanent income if the consumers knew with certainty that a specific regime had started