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Commodity prices and the business cycle in Latin America: Living and dying by commodities?

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  • Pérez-Quirós, Gabriel
  • Camacho, Máximo

Abstract

We analyze the dynamic interactions between commodity prices and output growth of the seven greatest exporters Latin American countries: Argentina, Brazil, Colombia, Chile, Mexico, Peru and Venezuela. Using a novel definition of Markov-switching impulse response functions, we find that the responses of their respective output growths to commodity price shocks are time dependent, size dependent and sign dependent. Overall, the major evidence of asymmetries in output growth responses occurs when commodity price shocks lead to regime shifts. Accordingly, we consider that the design of optimal counter-cyclical stabilization policies in this region should take into account that the reactions of the economic activity vary considerably across business cycle regimes.

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  • Pérez-Quirós, Gabriel & Camacho, Máximo, 2013. "Commodity prices and the business cycle in Latin America: Living and dying by commodities?," CEPR Discussion Papers 9367, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:9367
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    15. Fossati, Sebastian, 2014. "Output Growth and Commodity Prices in Latin America: What Has Changed?," Working Papers 2014-11, University of Alberta, Department of Economics.
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    More about this item

    Keywords

    Emerging markets; Non linearities;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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