What Drives Business Cycles and International Trade in Emerging Market Economies?

Marcelo Sánchez ()

Revista ESPE - Ensayos Sobre Política Económica, 2010, vol. 28, issue 61, No 8324, 198-271

Abstract: This paper investigates the role of domestic and externalfactors in explaining business cycle and internationaltrade developments in fifteen emergingmarket economies. Results from sign-restrictedVARs show that developments in real output, inflationand international trade variables are dominatedby domestic shocks. External shocks, on average, explaina fraction of no more than 10% of the variationin the endogenous variables considered. Concerningimpulse responses, consumer prices and real importsare overall the endogenous variables most affected bydomestic disturbances. Consumer prices are mostlydriven by technology and risk premium shocks. Theshocks inducing the largest effects tend to be monetarydisturbances, which can be traced to unpredictablemonetary policy. These shocks generate relativelylarge impacts on real imports, which -owing tomuted reactions in real exports-, carry over to thetrade balance, alongside more modest changes inconsumer prices and real output.

Keywords: business cycles; international trade; emerging markets; structural shocks. (search for similar items in EconPapers)
JEL-codes: C32 E32 F41 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (1)

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https://doi.org/10.32468/Espe.6106

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Journal Article: What Drives Business Cycles and International Trade in Emerging Market Economies? (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:col:000107:008324

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