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Instability constraints and development traps: An empirical analysis of growth cycles and economic volatility in Latin America

Danilo Spinola ()

No 2, MERIT Working Papers from United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT)

Abstract: Latin America is a region marked by an endogenous pattern of volatility that halts its development process. This article consists of empirically testing its volatility characteristics in terms of cycles. This paper (1) uses a filter decomposition to isolate economic cycles of distinct natures on the GDP growth time series for 136 countries covering the period 1950-2016. (2) It calculates each country's cycle GDP volatility (standard deviation), and finally (3) applies clustering methods to classify the results into groups. The main conclusions point that the majority of Latin American countries the relative dominance of the long-run economic cycles explaining the overall volatility. Exceptions to that are Mexico, Colombia and Chile, in which the short-run cycle shows a higher relative importance. Data shows that LAC is not the most volatile region of the world, but it has some characteristics as a region in terms of the origin of their volatility.

Keywords: Macroeconomic Volatility; Economic Cycles; Time Series; Filter Decomposition (search for similar items in EconPapers)
JEL-codes: C21 C32 O47 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gro and nep-lam
Date: 2018-01-16
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Persistent link: https://EconPapers.repec.org/RePEc:unm:unumer:2018002

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