Latin American Cycles: Has Anything Changed After the Great Recession?

ABSTRACT

This paper analyzes the evolution of growth cycles and business cycles in Latin America from 1980 to 2013 by using monthly industrial production. Focusing on both synchronization and other cyclical features, we find evidence of significant cyclical links between the countries of the region, which seem to be highly integrated in this period. Notably, we find that the Great Recession did not lead to any significant impact on the preexisting Latin American cyclical linkages.

KEY WORDS:

• business cycle
• cyclical synchronization
• economic cycle
• growth cycle

Acknowledgments

We thank Arielle Beyaert, the editor, Ali Kutan, and two anonymous reviewers for helpful comments and suggestions. Any remaining errors are our own responsibility.

Funding

Maximo Camacho thanks CICYT for its support through grant ECO2013-45698.

Notes

^1. In particular, we implement the Bry–Boschan Gauss code created for Stock and Watson (2014).

^2. A good reference on MDS techniques is Timm (2002).

^3. 'Following the suggestion of the reviewers, we repeated all the analyses developed in the paper using GDP. Although the results are omitted to save space (they are available upon request) they are qualitatively similar to those that we obtained with IP.

^4. Due to data availability problems, we use the index of economic activity for Bolivia and Ecuador and the nonprimary added value index for Peru.

^5. In these maps, the axes are meaningless and the orientation of the picture is arbitrary.

^6. All the indexes in the table are statistically significant.

^7. Following the suggestion of a reviewer, we repeated all the analyses developed in the paper using the year 2000 as the breakpoint. Although the results are omitted to save space (they are available upon request) they are qualitatively similar to those that using 2008 as the breakpoint.