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Macroeconomics


Sharing a Ride on the Commodities Roller Coaster: Common Factors in Business Cycles of Emerging Economies
Fernandez, Andres; Gonzalez, Andres; Rodriguez, Diego
Working Papers - English - Dec, 2015

Fluctuations in commodity prices are an important driver of business cycles in small emerging market economies (EMEs). This paper documents how these fluctuations correlate strongly with the business cycle in EMEs. A commodity sector is then embedded into a multi-country EMEs business cycle model where exogenous fluctuations in commodity prices follow a common dynamic factor structure and coexist with other driving forces. The estimated model assigns to commodity shocks 42 percent of the variance in income, of which a considerable part is linked to the common factor. A further amplification mechanism is a spillover effect from commodity prices to risk premia.

Related JEL Codes:
E32 - Business Fluctuations; Cycles
F41 - Open Economy Macroeconomics


Revelation of Expectations in Latin America(REVELA) - Issue 56
Powell, Andrew; Sosa, Mariano
Newsletter / Journal - English - Nov, 2015

The September 2015 surveys of expectations conducted by Central Banks with inflation targeting regimes indicate that the simple average growth expectations for 2015 for the eight countries covered by REVELA have decreased by 0.2%, from 2.4% to 2.2%, compared to August. Furthermore, the GDP weighted average growth expectations have decreased by 0.4%, from 0.3% to -0.1%, falling below zero. Meanwhile, inflation expectations for 2015 have increased by 0.2%, from 5.1% to 5.3%, considering a simple average, and by 0.1% from 6.4% to 6.5%, on a GDP weighted average basis. At the individual country level, growth expectations for 2015 have fallen in Brazil by 0.7%, Uruguay by 0.4%, and Guatemala and Paraguay by 0.1% in both cases. They have remained constant in Colombia at 3.5%, Peru at 2.8%, Mexico by 2.3% and Chile at 2.2%. Inflation expectations for 2015 increased by 0.5% in Chile, Colombia and Peru, by 0.4% in Uruguay and by 0.2% in Brazil compared to previous month. They remained stable in Mexico at 2.8% and decreased by 0.2% in Guatemala and by 0.1% in Paraguay. With this results, expected growth for 2015 now ranges between -2.7% in Brazil and 3.9% in Paraguay, while expected inflation ranges between 2.8% in Mexico and 9.6% in Uruguay.


The Mystery of Saving in Latin America
Cavallo, Eduardo A.; Noy, Ilan; Becerra, Oscar
Working Papers - English - Nov, 2015

Using reduced-form regression models, this paper shows that average predicted private saving rates in Latin America and the Caribbean (LAC) are significantly lower than in other regions, particularly Emerging Asia (about 4 percentage points of GDP on average). Predicted public saving rates in LAC are also lower than in Emerging Asia, but by a smaller margin (1 percentage point of GDP on average). It is further shown that LAC private saving rates are below the region-specific prediction by approximately 1.5 percentage points of GDP on average. Finally, it is found that a greater reliance on external savings does not fully close the negative estimated private saving gap, reducing it by less than 1 percentage point. No gap is found in the case of public saving rates, suggesting that the lower predicted public saving rate in LAC is accounted for by the known determinants of fiscal policy.

Related JEL Codes:
E21 - Consumption; Saving; Wealth


Revelation of Expectations in Latin America(REVELA) - Issue 55
Powell, Andrew; Sosa, Mariano
Newsletter / Journal - English - Nov, 2015

The August 2015 surveys of expectations conducted by Central Banks with inflation targeting regimes indicate that the simple average growth expectations for 2015 for the eight countries covered by REVELA have decreased by 0.1% from 2.5% to 2.4%. Moreover, the GDP weighted average growth expectations have fallen by 0.2%, from 0.5% to 0.3%. Meanwhile, surveys indicate that inflation expectations for 2015 have increased by 0.2% from 4.9% to 5.1% considering the simple average, and by 0.1% from 6.3% to 6.4% on a GDP weighted average basis. At the individual country level, growth expectations for 2015 have fallen in Brazil (by 0.3%), Mexico (by 0.3%), Peru (by 0.2%), Chile (by 0.1%) and Uruguay (by 0.1%); while they have remained constant in Paraguay (at 4.0%) and Colombia (at 3.5%), and have increased in Guatemala (by 0.1%). Inflation expectations for 2015 have increased in Uruguay (by 0.5%), Chile (by 0.4%), Colombia (by 0.3%), Peru (by 0.2%) and Brazil (by 0.1%). They have remained stable in Paraguay (at 4.5%) and Mexico (at 2.8%) and have decreased in Guatemala (by 0.1%).Expected growth for 2015 now ranges between -2.0% in Brazil and 4.0% in Paraguay, while expected inflation ranges between 2.8% in Mexico and 9.3% in Brazil.


Understanding Domestic Savings in Chile
García, Gonzalo; Llodrá, Jose Ignacio; Cerda, Rodrigo; Fuentes, Rodrigo
Working Papers - English - Oct, 2015

This paper constructs time series data on savings per type of agent for Chile during the period 1960-2012. It is found that the economy’s average savings rate increased by 11 percentage points in the period 1985-2012 compared to 1960- 1984, with particularly pronounced growth in corporate savings. The evidence suggests that this increase was driven largely by the following measures: i) pension reform that introduced mandatory savings and private sector management, ii) banking reform, iii) tax reform, iv) capital markets reform and v) privatizations.

Related JEL Codes:
E21 - Consumption; Saving; Wealth
N16 - Macroeconomics and Monetary Economics; Growth and Fluctuations: Latin America; Caribbean


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