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The transmission of US shocks to Latin America

Fabio Canova ()

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: I study whether and how US shocks are transmitted to eight Latin American countries. US shocks are identified using sign restrictions and treated as exogenous with respect to Latin American economies. Posterior estimates for individual and average effects are constructed. US monetary shocks produce significant fluctuations in Latin America, but real demand and supply shocks do not. Floaters and currency boarders display similar output but different inflation and interest rate responses. The financial channel plays a crucial role in the transmission. US disturbances explain important portions of the variability of Latin American macrovariables, producing continental cyclical fluctuations and, in two episodes, destabilizing nominal exchange rate effects. Policy implications are discussed.

Keywords: Shocks; inflation (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-fmk, nep-mac and nep-mon
Date: 2003-05, Revised 2004-06
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Journal Article: The transmission of US shocks to Latin America (2005) Downloads
Working Paper: The Transmission of US Shocks to Latin America (2003) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:925

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