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Instability constraints and development traps: An empirical analysis of growth cycles and economic volatility in Latin America

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  • Sartorello Spinola, Danilo

    (UNU-MERIT, Maastricht University)

Abstract

Latin America is a region marked by an endogenous pattern of volatility that halts its development process. This article consists of empirically testing its volatility characteristics in terms of cycles. This paper (1) uses a filter decomposition to isolate economic cycles of distinct natures on the GDP growth time series for 136 countries covering the period 1950-2016. (2) It calculates each country's cycle GDP volatility (standard deviation), and finally (3) applies clustering methods to classify the results into groups. The main conclusions point that the majority of Latin American countries the relative dominance of the long-run economic cycles explaining the overall volatility. Exceptions to that are Mexico, Colombia and Chile, in which the short-run cycle shows a higher relative importance. Data shows that LAC is not the most volatile region of the world, but it has some characteristics as a region in terms of the origin of their volatility.

Suggested Citation

  • Sartorello Spinola, Danilo, 2018. "Instability constraints and development traps: An empirical analysis of growth cycles and economic volatility in Latin America," MERIT Working Papers 2018-002, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  • Handle: RePEc:unm:unumer:2018002
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    More about this item

    Keywords

    Macroeconomic Volatility; Economic Cycles; Time Series; Filter Decomposition;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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