Are Business Cycles Different in Asia and Latin America?

Alexander Hoffmaister and Jorge Roldos

No 1997/009, IMF Working Papers from International Monetary Fund

Abstract: This paper compares business cycles in Asia and in Latin America using structural vector autoregression analysis with panel data. The evidence for countries in these regions suggests that (i) the main source of output fluctuations is supply shocks, even in the short run; (ii) the real exchange rate is driven mostly by fiscal shocks; and (iii) terms of trade shocks are important for trade balance fluctuations but not for output or real exchange rate fluctuations. However, in Latin America, as opposed to Asia, output is affected more by external and domestic demand shocks.

Keywords: WP; interest rate; nominal exchange rate; open economy; price level; terms of trade shock; world interest rate shock; trade balance movement; real exchange rate; movements in Latin America; Real exchange rates; Terms of trade; Trade balance; Exchange rates; Supply shocks; Asia and Pacific (search for similar items in EconPapers)
Pages: 49
Date: 1997-01-01
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Citations: View citations in EconPapers (96)

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