Latin America in the global financial cycle: Vulnerability or resilience? An analysis of the Argentine case

Agustín Cucchiaro ()
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Agustín Cucchiaro: University of Buenos Aires, Argentina

Ensayos Económicos, 2023, vol. 1, issue 82, 128-158

Abstract: This work investigates the effects of an increase of the federal funds rate in the United States could generate on Latin American economies, taking as given the existence of a global financial cycle. This cycle is represented by a comovement between different financial variables at the international level. After carrying out an empirical analysis of gross capital flows for different countries, a VAR model is implemented for Argentina in order to compute Impulse-Response functions. The model results indicate that credit and terms of trade respond significantly to VIX impulses. The empirical analysis, together with the model results, show the important extent to which peripheral economies are vulnerable to the global financial cycle.

Keywords: contagion effects of monetary policy; financial stability; global financial cycle; VAR models (search for similar items in EconPapers)
JEL-codes: E44 F40 G15 (search for similar items in EconPapers)
Date: 2023
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