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Global Shocks and Emerging Economies: Disentangling the Commodity Roller Coaster

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  • Ferreira, Mauro Sayar
  • Valério, André Cordeiro

Abstract

Shocks in commodity prices are viewed as a major driver of emerging economies’ business cycle. We show this is not the case for Brazil, Chile, Colombia, and Peru when a structural vector autoregressive model accounts for macro-finance linkages at world and domestic levels. The presence of a global financial variable modifies established results as it endogenously influences commodity prices. Global demand shocks have been the main external driver of the business cycle in Brazil, Chile, and Peru, while global economic uncertainty shocks have been the main international driver of the Colombian GDP.

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  • Ferreira, Mauro Sayar & Valério, André Cordeiro, 2023. "Global Shocks and Emerging Economies: Disentangling the Commodity Roller Coaster," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 76(3), February.
    • Handle: RePEc:fgv:epgrbe:v:76:y:2023:i:3:a:82691
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