Instability Constraints and Development Traps An Empirical Analysis of Growth Cycles and Economic Volatility in Latin America

    Research output: Contribution to journalArticlepeer-review

    Abstract

    Latin America is a region marked by a constant and endogenous pattern of volatility that halts its development process. This article consists of empirically testing its volatility characteristics in terms of their regularities, using cycle theory, comparing it to other developing and developed regions. This paper (1) uses an asymmetric band pass filter decomposition to isolate economic cycles of distinct natures on the GDP growth time series for 136 countries in the Maddison Project Database, covering the period 1950-2018. (2) We calculate each country?s decomposed cycle amplitude and average duration, and (3) apply K-means clustering methods to classify the results into volatility groups, studying and understanding its features and characteristics. The main conclusions are that the majority of Latin American countries are subject to the relative dominance of the long-run economic cycles explaining the overall volatility, which could be linked to the high dependency in commodity exports, as changes in inputs caused by technology drive changes in specialization. Data shows that LAC is not the most volatile region of the world, as argued in the Structuralist literature. However, it has some common characteristics as a region in terms of the origin of its volatility.
    Original languageEnglish
    Pages (from-to)7
    Number of pages27
    JournalCepal Review
    Volume139
    Publication statusPublished (VoR) - 30 Apr 2023

    Keywords

    • Macroeconomic Volatility
    • Economic Cycles
    • Time Series
    • Filter Decomposition
    • Cluster Analysis

    Fingerprint

    Dive into the research topics of 'Instability Constraints and Development Traps An Empirical Analysis of Growth Cycles and Economic Volatility in Latin America'. Together they form a unique fingerprint.

    Cite this