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The contribution of domestic, regional and international factors to Latin America's business cycle

  • Boschi, Melisso
  • Girardi, Alessandro

This paper quantifies the relative contribution of domestic, regional and international factors to the fluctuation of domestic output in six key Latin American (LA) countries: Argentina, Bolivia, Brazil, Chile, Mexico and Peru. Using quarterly data over the period 1980:1-2003:4, a multi-variate, multi- country time series model was estimated to study the economic interdependence among LA countries and, in addition, between each of them and the three world largest industrial economies: the US, the Euro Area and Japan. Falsifying a common suspicion, it is shown that the proportion of LA countries' domestic output variability explained by industrial countries'factors is modest. By contrast, domestic and regional factors account for the main share of output variability at all simulation horizons. The implications for the choice of the exchange rate regime are also discussed.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 28147.

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Date of creation: Jul 2009
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Handle: RePEc:pra:mprapa:28147
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  1. M. Ayhan Kose & Christopher Otrok & Eswar S. Prasad, 2008. "Global Business Cycles: Convergence or Decoupling?," NBER Working Papers 14292, National Bureau of Economic Research, Inc.
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  17. Boschi, Melisso, 2007. "Foreign capital in Latin America: A long-run structural Global VAR perspective," Economics Discussion Papers 8918, University of Essex, Department of Economics.
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  22. M. Ayhan Kose & Christopher Otrok & Charles H. Whiteman, 2003. "International Business Cycles: World, Region, and Country-Specific Factors," American Economic Review, American Economic Association, vol. 93(4), pages 1216-1239, September.
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