TitleEssays on business cycles in emerging economies
NameFernandez Martin, Andres (author), Chang, Roberto (chair), Swanson, Norman R (co-chair), Bordo, Michael (internal member), Landon-Lane, John (internal member), Uribe, Martin (outside member), Rutgers University, Graduate School - New Brunswick,
Business cycles--Developing countries,
DescriptionThe central goal of this dissertation is to contribute to the understanding of business cycles in developing economies by combining the use of general equilibrium modeling, time series analysis and historical evidence. The dissertation is made of three separate but related chapters. In the first chapter, I put to the test the two leading approaches for analyzing business cycles in emerging economies by building a model that combines stochastic trends, interest rate shocks and financial frictions. I then estimate the model using Bayesian methods and Mexican data from the 1980s. The results favor strong financial frictions, volatile shocks to the processes for interest rates and transient technology, and modest trend shocks. Financial frictions act as powerful amplifying mechanisms to interest rate and transient technology shocks. The results are thus supportive of the view that assuming foreign interest rate shocks in conjunction with financial imperfections is a superior approach to assuming stochastic trends if one is trying to explain fluctuations in emerging economies. The second chapter presents an augmented model with two additional driving forces: terms of trade and government expenditure shocks. The model is estimated with Colombian data using both high frequency quarterly data and low frequency annual data. The results continue to suggest that financial frictions act as powerful amplifying mechanisms and that trend shocks are not relevant in explaining emerging market business cycles. Among the two new shocks added, just the terms of trade appear relevant and only in the low frequency data. The third chapter focuses on business cycles in emerging economies from a historical perspective. It is argued that the significant capital flows observed in Latin America during the 1920s and early 1930s offer a good historical experiment to study the transmission mechanism by which external shocks to capital markets turn into large capital flows and wider business cycles in developing economies. The chapter uses a framework that combines a historical account of the 1920s-1930s Latin American episode with a dynamic general equilibrium model aimed at explaining the dynamics observed in the data. The model does well in matching the expansionary/contractionary phases in output dynamics, in accordance with the main stylized facts observed in the business cycles in Latin American countries between 1925 and 1931.
NoteIncludes bibliographical references
Noteby Andres Fernandez Martin
CollectionGraduate School - New Brunswick Electronic Theses and Dissertations
Organization NameRutgers, The State University of New Jersey
RightsThe author owns the copyright to this work.