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De riesgo y pánico: una analítica de volatilidad y crecimiento 1960-2006
[About risk and panic, an overview of volatility and growth 1960-2006]

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  • Vedia Jerez, Daniel Hernan

Abstract

It has long been believed that commodity price variability causes problems for primary producing and dependent countries. This paper tests the effects of price uncertainty (volatility) on economic growth. The model is constructed using a yearly panel data for the ten biggest countries in South America. The results show that output per worker varies enormously across countries, even within the region. Our analysis shows that exogenous shocks continue having a significant negative effect on growth on developing countries. Despite volatility series are not constant through time, we found a homogenous negative effect within the region, but it is heterogeneous when we apply a causality test. The effect is commonly observed in economic time series and it shows that growth rates are significantly reduced by large discrete negative commodity price shocks. Our analysis documented that the impact on productivity (output per worker) is driven through capital formation and foreign investment, as well as, by differences in what we call ‘social infrastructure’ (i.e. institutions and government policies).

Suggested Citation

  • Vedia Jerez, Daniel Hernan, 2007. "De riesgo y pánico: una analítica de volatilidad y crecimiento 1960-2006
    [About risk and panic, an overview of volatility and growth 1960-2006]
    ," MPRA Paper 21577, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:21577
    as

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    File URL: https://mpra.ub.uni-muenchen.de/21577/1/MPRA_paper_21577.pdf
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    References listed on IDEAS

    as
    1. Jan Dehn, 2000. "Commodity price uncertainty and shocks: implications for economic growth," CSAE Working Paper Series 2000-10, Centre for the Study of African Economies, University of Oxford.
    2. Ray Barrell, 2000. "Choosing the regime: macroeconomic effects of UK entry into EMU," National Institute of Economic and Social Research (NIESR) Discussion Papers 168, National Institute of Economic and Social Research.
    3. Romer, Paul, 1994. "New goods, old theory, and the welfare costs of trade restrictions," Journal of Development Economics, Elsevier, vol. 43(1), pages 5-38, February.
    4. Rivera-Batiz, Luis A. & Romer, Paul M., 1991. "International trade with endogenous technological change," European Economic Review, Elsevier, vol. 35(4), pages 971-1001, May.
    5. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    6. Jan Dehn, 2000. "Commodity Price Uncertainty and Shocks: Implications for Economic Growth," Economics Series Working Papers WPS/2000-10, University of Oxford, Department of Economics.
    7. Razin, Assaf & Sadka, Efraim & Coury, Tarek, 2003. "Trade openness, investment instability and terms-of-trade volatility," Journal of International Economics, Elsevier, vol. 61(2), pages 285-306, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Volatility; terms of trade; Latin America;

    JEL classification:

    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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