Output Fluctuations in Latin America : What Explains the Recent Slowdown?

Output Fluctuations in Latin America : What Explains the Recent Slowdown?

The authors explain Latin America's growth slowdown in 1998-1999. To do so, they use two complementary methodologies. The first aims at determining how much of the slowdown can be explained by specific external factors: the terms of trade, int...

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Bibliographic Details
Main Authors:	Herrera, Santiago, Perry, Guillermo, Quintero, Neile
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ANNUAL GROWTH AUTOREGRESSION AVERAGE LEVEL BENCHMARK BONDS BUSINESS CYCLE BUSINESS CYCLES CAPITAL FLOWS CAPITAL MARKETS CD CONTEMPORANEOUS CORRELATION CONVERTIBILITY COVARIANCE MATRIX CURRENCY CURRENCY CRISES CURRENCY DEPRECIATION CURRENT ACCOUNT CURRENT ACCOUNT BALANCE DATA AVAILABILITY DATA SETS DEPENDENT VARIABLE DEVELOPING COUNTRIES DOMESTIC INTEREST RATES DOMESTIC REAL INTEREST RATE DOMESTIC REAL INTEREST RATES DYNAMIC PANEL ECONOMIC PERFORMANCE ECONOMIC POLICY EMERGING MARKETS EMPIRICAL EVIDENCE EMPIRICAL LITERATURE ENDOGENOUS VARIABLES ESTIMATED COEFFICIENTS ESTIMATION RESULTS EXCHANGE RATE VARIABILITY EXPLANATORY VARIABLES EXTERNAL % SHOCKS EXTERNAL CONDITIONS EXTERNAL DEBT EXTERNAL ENVIRONMENT EXTERNAL FACTORS EXTERNAL SHOCKS FISCAL POLICY GDP GROSS DOMESTIC PRODUCT GROWTH RATE GROWTH RATES INCREASE GROWTH INCREASES GROWTH INDIVIDUAL COUNTRIES INDUSTRIAL COUNTRIES INDUSTRIALIZED COUNTRIES INTEREST RATE SHOCKS INTERNAL FACTORS INTERNATIONAL INTEREST RATES LAGGED DEPENDENT LAGGED VALUE MACROECONOMIC OUTCOMES MULTIPLIERS NEGATIVE EFFECT OUTPUT FLUCTUATIONS OUTPUT GROWTH OUTPUT VARIABILITY OUTPUT VOLATILITY PANEL REGRESSIONS POLICY RESEARCH POLICY VARIABLES POOLING POVERTY REDUCTION REAL EXCHANGE REAL EXCHANGE RATE REAL EXCHANGE RATES REAL INTEREST REAL INTEREST RATE REAL INTEREST RATES REAL OUTPUT RELATIVE IMPORTANCE SCENARIOS STANDARD DEVIATION TERMS OF TRADE TERMS OF TRADE SHOCKS
Online Access:	http://documents.worldbank.org/curated/en/2000/05/437692/output-fluctuations-latin-america-explains-recent-slowdown http://hdl.handle.net/10986/18841

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Summary:	The authors explain Latin America's growth slowdown in 1998-1999. To do so, they use two complementary methodologies. The first aims at determining how much of the slowdown can be explained by specific external factors: the terms of trade, international interest rates, spreads on external debt, capital flows, and climatological factors (El Nino). Using quarterly GDP data for the eight largest countries in the region, the authors estimate a dynamic panel showing that 50-60 percent of the slowdown was due to these external factors. The second approach allows for effects on output by some endogeneous variables, such as domestic real interest rates, and real exchange rates. Using monthly industrial performance data, the authors estimate country-specific generalized vector auto-regressions (GVAR) for the largest countries. They find that during the sample period (1992-98) output volatility is mostly associated with shocks to domestic factors, but the slowdown in the sub-period 1998-99 is explained more than 60 percent by shocks to the external factors.