Commodity Prices and the Business Cycle in Latin America: Living and Dying by Commodities?

Maximo Camacho and Gabriel Perez-Quiros
Authors registered in the RePEc Author Service: Gabriel Perez Quiros

Emerging Markets Finance and Trade, 2014, vol. 50, issue 2, 110-137

Abstract: We analyze the dynamic interactions between commodity prices and output growth of the seven biggest Latin American exporters: Argentina, Brazil, Chile, Colombia, Mexico, Peru, and Venezuela. Using a novel definition of Markov-switching impulse response functions, we find that the response of each country's output growth to commodity price shocks is time dependent, size dependent, and sign dependent. The major evidence of asymmetries in output growth responses occurs when commodity price shocks lead to regime shifts. Thus, we conclude that the design of optimal countercyclical stabilization policies should consider that the reactions of economic activity vary considerably across business cycle regimes.

Keywords: business cycles; commodity prices; output growth (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (17)

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Related works:
Working Paper: Commodity prices and the business cycle in Latin America: Living and dying by commodities (2013)
Working Paper: Commodity prices and the business cycle in Latin America: Living and dying by commodities? (2013)
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