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Are Business Cycles Different in Asia and Latin America?

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  • Willy W. Hoffmaister
  • Jorge Roldos

Abstract

This paper compares business cycles in Asia and in Latin America using structural vector autoregression analysis with panel data. The evidence for countries in these regions suggests that (i) the main source of output fluctuations is supply shocks, even in the short run; (ii) the real exchange rate is driven mostly by fiscal shocks; and (iii) terms of trade shocks are important for trade balance fluctuations but not for output or real exchange rate fluctuations. However, in Latin America, as opposed to Asia, output is affected more by external and domestic demand shocks.

Suggested Citation

  • Willy W. Hoffmaister & Jorge Roldos, 1997. "Are Business Cycles Different in Asia and Latin America?," IMF Working Papers 97/9, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:97/9
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    References listed on IDEAS

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    1. Mendoza, Enrique G, 1995. "The Terms of Trade, the Real Exchange Rate, and Economic Fluctuations," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(1), pages 101-137, February.
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    6. Guillermo A. Calvo & Leonardo Leiderman & Carmen M. Reinhart, 1994. "The Capital Inflows Problem: Concepts And Issues," Contemporary Economic Policy, Western Economic Association International, vol. 12(3), pages 54-66, July.
    7. Lastrapes, William D, 1992. "Sources of Fluctuations in Real and Nominal Exchange Rates," The Review of Economics and Statistics, MIT Press, vol. 74(3), pages 530-539, August.
    8. Eduardo Borensztein & Carmen M. Reinhart, 1994. "The Macroeconomic Determinants of Commodity Prices," IMF Staff Papers, Palgrave Macmillan, vol. 41(2), pages 236-261, June.
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    10. Ahmed, Shaghil & Ickes, Barry W. & Ping Wang & Byung Sam Yoo, 1993. "International Business Cycles," American Economic Review, American Economic Association, vol. 83(3), pages 335-359, June.
    11. Devereux, John & Connolly, Michael, 1996. "Commercial policy, the terms of trade and the real exchange rate revisited," Journal of Development Economics, Elsevier, vol. 50(1), pages 81-99, June.
    12. Obstfeld, Maurice, 1989. "Fiscal deficits and relative prices in a growing world economy," Journal of Monetary Economics, Elsevier, vol. 23(3), pages 461-484, May.
    13. Michael Bruno & Jeffrey D. Sachs, 1985. "Economics of Worldwide Stagflation," NBER Books, National Bureau of Economic Research, Inc, number brun85-1, July.
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