The Effect of External Conditions on Growth in Latin America

Österholm, Pär; Zettelmeyer, Jeromin

doi:10.1057/imfsp.2008.20

Cited by 83 publications

(87 citation statements)

References 28 publications

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“…The dominant role of external factors in the long run is found for all quarters. In particular, external factors account for about 30 % of the long-run (20-quarter horizon) variance of LA GDP growth, consistently with the evidence in Österholm and Zettelmeyer (2007) and in Aiolfi et al (2010).…”

Section: Empirical Evidencesupporting

confidence: 78%

“…After the debt crisis of the 1980s, most countries in the region benefited from huge capital inflows (with a resulting high growth rate) until the Russian crisis in the late nineties led to their sudden drying up; then, in the early years of the following decade higher liquidity, a dramatic rise in commodity prices and low risk premia created a particularly favourable macroeconomic and financial environment in the region and generated again robust growth (Österholm and Zettelmeyer 2007;Izquierdo et al 2008); therefore, the question has been asked whether there has been a decoupling of the business cycle in the industrialised countries and the LA region, respectively, the latter having become an increasingly autonomous source of growth for the world economy.…”

mentioning

confidence: 99%

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Business cycles, international trade and capital flows: evidence from Latin America

Caporale

Girardi

2015

Empir Econ

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Section: Empirical Evidencesupporting

confidence: 78%

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confidence: 99%

Business cycles, international trade and capital flows: evidence from Latin America

Caporale

Girardi

2015

Empir Econ

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“…An exception is Österholm and Zettelmeyer (2007). Third, we extend the menu of external factors to incorporate new developments in financial and commodity markets.…”

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confidence: 99%

Booms and Busts in Latin America: The Role of External Factors

2008

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The views and interpretations in this document are those of the authors and should not be attributed to the Inter-American Development Bank, or to any individual acting on its behalf. This paper may be freely reproduced provided credit is given to the Research Department, InterAmerican Development Bank. Terms of use: Documents inThe Research Department (RES) produces a quarterly newsletter, IDEA (Ideas for Development in the Americas), as well as working papers and books on diverse economic issues. To obtain a complete list of RES publications, and read or download them please visit our web site at: http://www.iadb.org/res. Modeling the relationship between LAC7 GDP and several external factors, it is found that those factors account for a significant share of variance in LAC7 GDP growth, and that external shocks produce significant responses. Likewise, a significant share of recent LAC7 growth performance can be explained by an external factor "tailwind." Also evaluated is the impact of deterioration in external financial conditions. Finally, the relevance of these findings for policy evaluation is emphasized. Growth performance, the strength or weakness of macroeconomic fundamentals and the impact of domestic macro and micro policies on growth can only be properly appraised by first filtering out the effects of external factors.JEL Classification: F31, F32, F34, F41

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“…11 Estimates also suggest that a 10 percent increase in oil prices could lead to an appreciation of the real effective exchange rate (that is, reduce competitiveness) by 2.8 percentage points 10 In the short and medium terms, the impact of higher oil prices on real GDP growth and the real exchange rate of Caribbean economies is estimated with a vector autoregression model with block exogeneity restrictions in line with the spillover effects literature. See Cashin and Sosa (2013) and Osterholm and Zettelmeyer (2008). 11 The results are comparable with those for other Latin American countries, such as Chile and Guatemala.…”

Section: Impact Of Energy Costs On Growth: How Important?mentioning

confidence: 71%

Unleashing Growth and Strengthening Resilience in the Caribbean

Srinivasan¹,

Ötker²,

Ramakrishnan³

et al. 2017

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In its aim to stimulate policy dialogue and help policymakers overcome the challenges that hinder Caribbean economies from fulfilling their potential for growth and development, this book is a timely success. By bringing together up-to-date research on the challenges of weak macroeconomic fundamentals and long-standing structural impediments, it provides insights and policy perspectives that can shape coherent answers to these pressing policy concerns. The book's careful analyses point the way toward opportunities for welfare gains from determined but balanced policy actions targeted at the region's high energy costs, financial exclusion, high crime rates, and the persistent loss of skilled workers to richer countries. Consideration of the vulnerabilities and opportunities that arise from financial interconnectedness across the Caribbean also informs the book's reminder to policymakers of the benefits that remain to be exploited by greater regional cooperation in a number of areas. With its relevance and range of evidence-based policy recommendations, this volume earns its place on the bookshelves of practitioners and other students of Caribbean economic development. -Brian Wynter Governor, Bank of JamaicaThis book provides a comprehensive assessment of three major Caribbean contemporary economic challenges-slow growth, macroeconomic imbalances, and structural impediments. The chapters are skillfully written by Fund economists, who are versed in the various aspects of Caribbean economic issues, to relate the challenges to the vicious cycle. Policy recommendation is an important aspect of the book and addressed at both the individual country and regional levels. This book is a mustread for public policymakers and anyone interested in contemporary Caribbean and small states economic and financial issues.-Dr. Gobind Ganga Governor, Bank of Guyana Economic growth in the Caribbean over the last two decades has been slow, both relative to growth in the region over the previous 20 years and in comparison to other small, non-Caribbean countries. Unleashing Growth and Strengthening Resilience in the Caribbean provides a thorough analysis of the region's subpar economic performance and lays out a practical approach for improvement. The authors highlight key policy changes that merit serious consideration: building greater resilience to increasingly frequent hurricanes; reducing the cost of energy; greater investment in infrastructure; more regional cooperation and integration; microeconomic reforms to reduce the cost of doing business; and countercyclical fiscal policy. But the path to faster sustainable and inclusive growth is different for each of the 13 countries examined in this book, and it's refreshing to see the IMF embark upon a more collaborative, tailored approach to its recommendations for developing countries. This country-specific approach is part of a broader-and greatly welcomed-philosophical change at the Fund, which recognizes that the best kind of economic discipline does not push extreme measures such a...

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The Effect of External Conditions on Growth in Latin America

Cited by 83 publications

References 28 publications

Business cycles, international trade and capital flows: evidence from Latin America

Business cycles, international trade and capital flows: evidence from Latin America

Booms and Busts in Latin America: The Role of External Factors

Unleashing Growth and Strengthening Resilience in the Caribbean

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