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Volatility and Growth in Latin America: An Episodic Approach
Author: Ms. Ratna Sahay and Rishi Goyalhttps://orcid.org/0000-0002-5853-9207
Series:
IMF Working Papers
Volume/Issue:
Volume 2006: Issue 287
Language:
English
Publication Date:
01 Dec 2006
DOI:
https://doi.org/10.5089/9781451865479.001
ISBN:
9781451865479
ISSN:
1018-5941
Pages:
52
Keywords:
WP; terms of trade; exchange rate; country authorities; real interest rate; Growth; Volatility; Structural Reforms; Latin America; Episodic Approach; Latin American country; country case studies; simple average; country policy; long-run growth performance; composite index; Exchange rate arrangements; Real interest rates; Currency crises; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper compares the pattern of macroeconomic volatility in 17 Latin American countries during episodes of high and low growth since 1970, examining in particular the role of policy volatility. Macroeconomic outcomes are distinguished from macroeconomic policies, structural reforms and reversals, shocks, and institutional constraints. Based on previous work, a composite measure of structural reforms is constructed for the 1970-2004 period. We find that outcomes and policies are more volatile in low growth episodes, while shocks (except U.S. interest rates) are similar across episodes. Fiscal policy volatility is associated with lower growth, but fiscal policy procyclicality is not. Low levels of market-oriented reforms and structural reform reversals are also associated with lower growth.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund