Central America’s Regional Trends and U.S. Cycles

Author/Editor:

Shaun K. Roache

Publication Date:

February 1, 2008

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

The economies of Central America share a close relationship with the United States, with considerable comovement of GDP growth over a long period of time. Trade, the financial sector, and remittance flows are all potential channels through which the U.S. cycle could affect the region. But just how dependent is growth in the region on the U.S.? Using the common cycles method of Vahid and Engle (1993), this paper suggests that the business cycle is dominated by the U.S.; region-specific growth drivers tend to be long-lasting shocks, rather than temporary fluctuations. The most cyclically sensitive countries include Costa Rica, El Salvador, and Honduras.

Series:

Working Paper No. 2008/050

Subject:

Business cycles Exports Financial sector Foreign banks Remittances

English

Publication Date:

February 1, 2008

ISBN/ISSN:

9781451869125/1018-5941

Stock No:

WPIEA2008050

Pages:

30

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