New Economics Papers
on Central and South America
Issue of 2006‒07‒15
two papers chosen by

  1. Conflict, Decentralisation and Local Governance in Colombia, 1974-2004 By Fabio Sánchez; María del Mar Palau
  2. Stylized Facts of the Peruvian Economy By Paul Castillo; Carlos Montoro; Vicente Tuesta

  1. By: Fabio Sánchez (CEDE, Universidad de los Andes); María del Mar Palau (CEDE, Universidad de los Andes)
    Date: 2006–04
  2. By: Paul Castillo (Central bank of Peru); Carlos Montoro (Central bank of Peru); Vicente Tuesta (Central bank of Peru)
    Abstract: In this paper we report the main stylized facts of the business cycle for the Peruvian Economy. This study is important for the development of economic models, which are useful to evaluate the impact of different economic policies. Moreover, for those models to have empirical validity, it is necessary they reproduce the short run dynamics of the economy. Because of this, we need a clear understanding of the stylized facts of the business cycle, in particular the volatility and the co-movements of the main macroeconomic variables. Our results can be summarized as follows: First, we verify an important structural change in the Peruvian economy in the 90´s respect to the 80´s. In particular, we observe both broader trade and financial openness, more stable fiscal and monetary policies, and deeper financial markets. Second, as a consequence of this structural change and the adoption of the fully-fledge inflation targeting regime, the cyclical behavior of the main macroeconomic variables has changed in important ways. In particular, we observe during the last period (1994-2005) in comparison with the previous period (1980-1993): a reduction of almost 4 times in volatility of output and its main components, a higher correlation of the business cycle with terms of trade, a less pro-cyclical fiscal policy, and since 2002, a higher importance of the interest rates on business cycle and inflation fluctuations.
    Keywords: Ciclo Económico, Filtro Baxter y King, Perú.
    JEL: C82 E10 E30
    Date: 2006–06

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