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Perturbaciones Internacionales y Fluctuaciones del Producto Interno Bruto en una Economía en Desarrollo: Evidencia de República Dominicana para el Período 1998-2008
[International Shocks and GDP fluctuations in a Developing Economy: Evidence from the Dominican Republic for the Period 1998-2008]

The aim of this work is to contribute to the literature of the role of foreign factors in determining the fluctuations of the Gross Domestic Product (GDP) in small, open and developing countries. The following external variables are considered: terms of trade, foreign GDP, foreign inflation and international interest rates. Using the Dominican Republic as a case study, a macroeconomic model of short-term fluctuations which considers the main mechanisms of propagation of external shocks in explaining fluctuations in GDP is specified and estimated. The simulation results suggest that external variables play an important role in generating fluctuations in the Dominican GDP. Of all the variables, the cycles of the United States output, has the greatest impact. The terms of trade shocks are transferred approximately 1 to 1 in the long term. Finally, the effects of foreign interest rates on domestic fluctuations are low and gradual.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 38987.

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Date of creation: 2009
Date of revision:
Handle: RePEc:pra:mprapa:38987
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  1. Alexander W. Hoffmaister & Jorge E. Roldós & Peter Wickham, 1998. "Macroeconomic Fluctuations in Sub-Saharan Africa," IMF Staff Papers, Palgrave Macmillan, vol. 45(1), pages 132-160, March.
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  10. Estrella, Arturo & Mishkin, Frederic S., 1997. "Is there a role for monetary aggregates in the conduct of monetary policy?," Journal of Monetary Economics, Elsevier, vol. 40(2), pages 279-304, October.
  11. Adrian Pagan & Don Harding, 2005. "A suggested framework for classifying the modes of cycle research," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(2), pages 151-159.
  12. Sebastian Edwards & Eduardo Levy Yeyati, 2003. "Flexible Exchange Rates as Shock Absorbers," NBER Working Papers 9867, National Bureau of Economic Research, Inc.
  13. Jorge Roldos & Alexander W. Hoffmaister, 1996. "The Sources of Macroeconomic Fluctuations in Developing Countries: Brazil and Korea," IMF Working Papers 96/20, International Monetary Fund.
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  15. Raddatz, Claudio, 2005. "Are external shocks responsible for the instability of output in low income countries?," Policy Research Working Paper Series 3680, The World Bank.
  16. Kalulumia, Pene & Nyankiye, Francine, 2000. "Labor Adjustment Costs, Macroeconomic Shocks and Real Business Cycles in a Small Open Economy," Journal of Macroeconomics, Elsevier, vol. 22(4), pages 671-694, October.
  17. Svensson, Lars E O & Razin, Assaf, 1983. "The Terms of Trade and the Current Account: The Harberger-Laursen-Metzler Effect," Journal of Political Economy, University of Chicago Press, vol. 91(1), pages 97-125, February.
  18. Paul Cashin, 2004. "Caribbean Business Cycles," IMF Working Papers 04/136, International Monetary Fund.
  19. Lovell, Michael C, 1986. "Tests of the Rational Expectations Hypothesis," American Economic Review, American Economic Association, vol. 76(1), pages 110-24, March.
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