The effects of US business cycle on Argentinean economy

CARRERA, JORGE EDUARDO; FÉLIZ, MARIANO; PANIGO, DEMIAN TUPAC

Belém (Brasil)

Congreso; XXVII Encontro Nacional de Economia; 1999

Associação Nacional dos Centros de Pós-Graduação em Economia (Brasil)

transmission of the international business cycle. We concentrate in the study of the relationship of the United States’ business cycle (the main determinant of the international cycle) and Argentina’s (a periferical country), working under the hypothesis that the relevant shocks happen in the first country while, through the different channels of transmission, they hit the Argentinean economy. For this task we differentiate amongst two kinds of channels of transmission of fluctuations: the financial channel (approximated by the international interest rate) and the trade channel (mainly, commercial flows and the terms of trade). Using a variety of instruments (correlation, causality and regression analysis, and later VEC modeling) we concentrate in the study of the direction, magnitude and velocity of transmission of macroeconomic fluctuations between both countries through the different channels. The results indicate the business cycle of Argentina is influenced in a significant manner by the United State’s business cycle. We also find important evidence that the financial channel is the most significant, with the trade channel having reduced magnitude.