Threshold effects of terms of trade on Latin American growth

Andre Vianna and Andre V. Mollick

Economic Systems, 2021, vol. 45, issue 4

Abstract: This paper investigates nonlinear relationships between terms of trade volatility (totvol) and economic growth in 14 Latin American economies from 1997 to 2014. In the 2000s, Latin American countries experienced accelerated economic growth often attributed to commodity price booms. We split the sample into two regimes based on totvol thresholds determined by bootstrap techniques. Fixed effects, instrumental variable and dynamic panel regressions address endogeneity in trade growth, subject to traditional economic channels such as domestic investment, population growth, exchange rate, government size, and institutions. We find statistically significant thresholds and stronger trade-growth links during the 2000s commodity boom and in larger economies.

Keywords: Economic development; Latin America; Panel data; Threshold techniques; Trade-growth nexus (search for similar items in EconPapers)
JEL-codes: B27 C23 C24 O47 O54 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecosys:v:45:y:2021:i:4:s0939362521000303

DOI: 10.1016/j.ecosys.2021.100882

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