Macrofinancial Linkages and Growth at Risk in the Dominican Republic

Olga Bespalova and Marina Rousset

No 2019/246, IMF Working Papers from International Monetary Fund

Abstract: This paper uses the Growth-at-Risk (GaR) methodology to examine how macrofinancial conditions affect the growth outlook and its probability distribution. Using this approach, we evaluate risks to GDP growth in the Dominican Republic using quarterly data for 1996-2018. We group macrofinancial conditions in five principal determinants, based on 32 indicators. The Dominican Republic’s growth distribution appears most vulnerable to negative shocks to domestic financial conditions, domestic leverage, domestic demand, and external demand, with additional repercussions from the external cost of borrowing in the longer run. Our findings show that domestic monetary policy plays a particularly important role in reducing growth vulnerabilities when the economy is weak.

Keywords: WP; financial condition; interest rate; borrowing cost; transmission mechanism; Dominican Republic; Growth at Risk; financial conditions; macrofinancial linkages; macroeconomic condition; liquidity condition; impact monetary policy; external cost; financial-market openness; GaR methodology; external borrowing costs; Growth-at-Risk methodology; monetary policy variable; Credit; Liquidity; Global (search for similar items in EconPapers)
Pages: 19
Date: 2019-11-13
New Economics Papers: this item is included in nep-fdg and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=48792 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2019/246

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().