The International Crisis and Latin America

CASE Network Studies and Analyses No. 429

Monetaria, Vol 1 (1): 37-62, 2012

26 Pages Posted: 26 Aug 2011 Last revised: 13 Sep 2017

See all articles by Vittorio Corbo

Vittorio Corbo

Pontificia Universidad Catolica de Chile

Klaus Schmidt-Hebbel

Pontificia Universidad Católica de Chile

Date Written: August 1, 2011

Abstract

Latin America has been strongly affected by the international crisis and recession since late 2008. In comparison to historical experience, how has Latin America coped with the global crisis, which has been the role of different transmission mechanisms, and how have the region’s structural and policy conditions affected its sensitivity to foreign shocks? Moreover, what policies can protect the region better from world crises and shocks, and to which extent should it rely on a strategy of close trade and financial integration into a world economy punctuated by shocks and crises? This paper addresses the latter questions in three steps. First, by assessing empirically the sensitivity of growth in the region’s seven major economies during 1990-2009 to large number of structural and cyclical factors, based on high-frequency panel-data estimations. Second, by using the latter results to decompose the amplitude of GDP reductions in both recessions according to the individual and combined contribution of the different growth factors. Third, to derive the main implications of the results for the choice of macroeconomic regimes and development strategies.

Keywords: Growth, Macroeconomic adjustment, Latin America

JEL Classification: O47, E6, O54

Suggested Citation

Corbo, Vittorio and Schmidt-Hebbel, Klaus, The International Crisis and Latin America (August 1, 2011). CASE Network Studies and Analyses No. 429, Monetaria, Vol 1 (1): 37-62, 2012, Available at SSRN: https://ssrn.com/abstract=1917423 or http://dx.doi.org/10.2139/ssrn.1917423

Vittorio Corbo (Contact Author)

Pontificia Universidad Catolica de Chile ( email )

Av Libertador General Bernardo O'Higgins 340
Santiago, Región Metropolitana 8331150
Chile

HOME PAGE: http://www.faceapuc.cl/personal/vcorbo/

Klaus Schmidt-Hebbel

Pontificia Universidad Católica de Chile ( email )

Av. Vicuna Mackenna 4860
Santiago
Chile

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