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The Effects of Global Shocks on Small Commodity-Exporting Economies: Lessons from Canada

Valery Charnavoki and Juan Dolado

American Economic Journal: Macroeconomics, 2014, vol. 6, issue 2, 207-37

Abstract: We propose a structural dynamic factor model of a small commodity-exporting economy, using Canada as a representative case study. Combining large panel data sets of the global and do- mestic economies, sign restrictions are used to identify relevant demand and supply shocks that explain volatility in real commod- ity prices. We quantify their dynamic e ffects on a wide variety of Canadian macro variables. We are able to reproduce all the main stylized features at business-cycle frequencies documented in the literature on this type of economies. These include a Dutch disease eff ect which has proven hard to find in empirical studies.

JEL-codes: E32 F14 F32 F43 F44 Q02 Q33 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/mac.6.2.207
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Citations: View citations in EconPapers (88)

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Handle: RePEc:aea:aejmac:v:6:y:2014:i:2:p:207-37