Abstract

https://ssrn.com/abstract=2795285
 


 



Output Gaps and Policy Stabilisation in Latin America: The Effect of Commodity and Capital Flow Cycles


Enrique Alberola


BIS; Bank of Spain- International Dept

Rocio Gondo


Independent

Marco J. Lombardi


Bank for International Settlements (BIS) - Monetary and Economic Department

Diego Urbina


Bank for International Settlements (BIS)

June 2016

BIS Working Paper No. 568

Abstract:     
We provide a measure of the output gap that filters out the impact of the commodity and net capital inflows booms for Latin American countries. These two factors temporarily boost output and so are likely to push up estimates of potential growth in the region to unrealistic levels, thereby resulting in an underestimation of the output gaps during the upswing of the commodity cycle. We also shed light on the interaction between the two components. The results show that commodity prices has been the dominant factor explaining deviation of activity from sustainable levels. The timely consideration of these factors could prevent a procyclical fiscal policy bias in the region.

Number of Pages in PDF File: 24

Keywords: output gap, commodity prices, capital flows, procyclicality, fiscal policy, Latin America

JEL Classification: E44, E52, E62, H30, H62


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Date posted: June 14, 2016  

Suggested Citation

Alberola, Enrique and Gondo, Rocio and Lombardi, Marco J. and Urbina, Diego, Output Gaps and Policy Stabilisation in Latin America: The Effect of Commodity and Capital Flow Cycles (June 2016). BIS Working Paper No. 568. Available at SSRN: https://ssrn.com/abstract=2795285

Contact Information

Enrique Alberola (Contact Author)
BIS ( email )
Ruben Dario 281
Polanco, Miguel Hidalgo
Mexico City, 11580
Mexico
HOME PAGE: http://www.bis.org/author/enrique_alberola-ila.htm
Bank of Spain- International Dept ( email )
Alcala 50
Madrid
Spain
Rocio Gondo
Independent
No Address Available
Marco Jacopo Lombardi
Bank for International Settlements (BIS) - Monetary and Economic Department ( email )
Centralbahnplatz 2
CH-4002 Basel
Switzerland
+41612809492 (Phone)
Diego Urbina
Bank for International Settlements (BIS)
Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland
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