Business Cycles Accounting for Paraguay
This study investigates the role of domestic and external shocks in business cycle fluctuations in Paraguay during 1991–2012. Time-series methods and a structural model-based approach are used to conduct an integrated analysis of business cycles. F...
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| Format: | Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2015
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2015/06/24577785/business-cycles-accounting-paraguay http://hdl.handle.net/10986/22157 |
| id |
okr-10986-22157 |
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| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
MONETARY POLICY CAPITAL MARKETS PRODUCTION MARKET DISTORTIONS LAGS INTERNATIONAL CAPITAL FOREIGN INVESTORS INCOME INTEREST EXPECTATIONS ASSET PRICES INFLATIONARY EXPECTATIONS EMERGING ECONOMIES INTEREST RATE REAL GDP EXCHANGE DISCOUNT RATE INSURER LIQUIDITY DEVELOPING COUNTRIES EXPORTS MARGINAL PRODUCT POLITICAL ECONOMY DEVELOPING ECONOMIES PORTFOLIO FISCAL POLICY WORLD DEVELOPMENT INDICATORS WELFARE WORLD MARKETS VARIABLES DOMESTIC PRICE FACTORS OF PRODUCTION CAPITAL STOCK PRICE TAX INPUTS PAYMENTS WEALTH SAVING PUBLIC REGISTRY AGRICULTURAL OUTPUT TRENDS CENTRAL BANK DEVELOPMENT LABOR MARKET CAPITAL ALLOCATION FISCAL POLICIES INFLUENCE MARGINAL PRODUCTS VOLATILE ECONOMIES TRADE BALANCE TOTAL FACTOR PRODUCTIVITY SAVINGS PRODUCTION STRUCTURE DEVELOPMENT ECONOMICS LOW-INCOME COUNTRIES VOLATILITIES LOW INTEREST RATES INTEREST RATE SHOCK PRODUCTIVITY INTEREST RATES INTEREST RATE SHOCKS MIDDLE-INCOME ECONOMIES NATURAL DISASTERS NET EXPORTS DEBT FINANCIAL FLOWS OPEN ECONOMY REAL INTEREST RATE GLOBAL BUSINESS CAPITAL STOCKS INVENTORIES UTILITY AVERAGING GROSS DOMESTIC PRODUCT COMMODITY PRICE ECONOMIC RESEARCH TAXES INVESTMENT DECISIONS EQUITY INFLATION EXPECTATIONS INVESTORS PRODUCTIVITY GROWTH CONSUMPTION HUMAN CAPITAL CAPITAL WAGES VOLATILITY MARKET CONDITIONS FUTURE VALUE PRODUCTION FUNCTIONS CREDIT FORMAL ANALYSIS MACROECONOMICS DEMAND OUTPUT GAP UTILITY FUNCTION WORKING CAPITAL ECONOMIC FLUCTUATIONS ECONOMY AGRICULTURE CONSUMERS CAPITAL FLOWS PRICE FLUCTUATIONS TAX RATES SHARES FINANCIAL INFLOWS BENCHMARK ECONOMIC THEORY PAYROLL TAXES CREDIT BUREAU PRODUCTION FUNCTION ECONOMICS CAPITAL RETURNS OUTPUT PRICE MOVEMENTS ENFORCEMENT BUSINESS CYCLES ECONOMIC DEVELOPMENT TRADE LOW-INCOME ECONOMIES GDP GOODS THEORY EMERGING ECONOMY GROWTH RATE INVESTMENT SHARE DEVELOPING ECONOMY AUTOREGRESSION FINANCIAL MARKETS CAPITAL INFLOWS GINI COEFFICIENT ECONOMIC TIME SERIES NOMINAL INTEREST RATE RAPID GROWTH COMMODITIES EXCHANGE RATE AVERAGE PRODUCTIVITY COMMODITY PRICES OPEN ECONOMIES LIQUID ASSETS COMMODITY STICKY WAGES POSITIVE EFFECTS MIDDLE INCOME COUNTRIES SMALL ECONOMY GLOBAL ECONOMIC PROSPECTS PRICES DEVELOPMENT POLICY |
| spellingShingle |
MONETARY POLICY CAPITAL MARKETS PRODUCTION MARKET DISTORTIONS LAGS INTERNATIONAL CAPITAL FOREIGN INVESTORS INCOME INTEREST EXPECTATIONS ASSET PRICES INFLATIONARY EXPECTATIONS EMERGING ECONOMIES INTEREST RATE REAL GDP EXCHANGE DISCOUNT RATE INSURER LIQUIDITY DEVELOPING COUNTRIES EXPORTS MARGINAL PRODUCT POLITICAL ECONOMY DEVELOPING ECONOMIES PORTFOLIO FISCAL POLICY WORLD DEVELOPMENT INDICATORS WELFARE WORLD MARKETS VARIABLES DOMESTIC PRICE FACTORS OF PRODUCTION CAPITAL STOCK PRICE TAX INPUTS PAYMENTS WEALTH SAVING PUBLIC REGISTRY AGRICULTURAL OUTPUT TRENDS CENTRAL BANK DEVELOPMENT LABOR MARKET CAPITAL ALLOCATION FISCAL POLICIES INFLUENCE MARGINAL PRODUCTS VOLATILE ECONOMIES TRADE BALANCE TOTAL FACTOR PRODUCTIVITY SAVINGS PRODUCTION STRUCTURE DEVELOPMENT ECONOMICS LOW-INCOME COUNTRIES VOLATILITIES LOW INTEREST RATES INTEREST RATE SHOCK PRODUCTIVITY INTEREST RATES INTEREST RATE SHOCKS MIDDLE-INCOME ECONOMIES NATURAL DISASTERS NET EXPORTS DEBT FINANCIAL FLOWS OPEN ECONOMY REAL INTEREST RATE GLOBAL BUSINESS CAPITAL STOCKS INVENTORIES UTILITY AVERAGING GROSS DOMESTIC PRODUCT COMMODITY PRICE ECONOMIC RESEARCH TAXES INVESTMENT DECISIONS EQUITY INFLATION EXPECTATIONS INVESTORS PRODUCTIVITY GROWTH CONSUMPTION HUMAN CAPITAL CAPITAL WAGES VOLATILITY MARKET CONDITIONS FUTURE VALUE PRODUCTION FUNCTIONS CREDIT FORMAL ANALYSIS MACROECONOMICS DEMAND OUTPUT GAP UTILITY FUNCTION WORKING CAPITAL ECONOMIC FLUCTUATIONS ECONOMY AGRICULTURE CONSUMERS CAPITAL FLOWS PRICE FLUCTUATIONS TAX RATES SHARES FINANCIAL INFLOWS BENCHMARK ECONOMIC THEORY PAYROLL TAXES CREDIT BUREAU PRODUCTION FUNCTION ECONOMICS CAPITAL RETURNS OUTPUT PRICE MOVEMENTS ENFORCEMENT BUSINESS CYCLES ECONOMIC DEVELOPMENT TRADE LOW-INCOME ECONOMIES GDP GOODS THEORY EMERGING ECONOMY GROWTH RATE INVESTMENT SHARE DEVELOPING ECONOMY AUTOREGRESSION FINANCIAL MARKETS CAPITAL INFLOWS GINI COEFFICIENT ECONOMIC TIME SERIES NOMINAL INTEREST RATE RAPID GROWTH COMMODITIES EXCHANGE RATE AVERAGE PRODUCTIVITY COMMODITY PRICES OPEN ECONOMIES LIQUID ASSETS COMMODITY STICKY WAGES POSITIVE EFFECTS MIDDLE INCOME COUNTRIES SMALL ECONOMY GLOBAL ECONOMIC PROSPECTS PRICES DEVELOPMENT POLICY Hnatkovska, Viktoria Koehler-Geib, Friederike Business Cycles Accounting for Paraguay |
| geographic_facet |
Latin America & Caribbean Paraguay |
| relation |
Policy Research Working Paper;No. 7284 |
| description |
This study investigates the role of
domestic and external shocks in business cycle fluctuations
in Paraguay during 1991–2012. Time-series methods and a
structural model-based approach are used to conduct an
integrated analysis of business cycles. First, structural
vector autoregression is used to assess the role played by
external factors and domestic shocks in driving fluctuations
in gross domestic product through impulse response functions
and variance decompositions. The analysis finds that
external shocks such as terms of trade, world interest rate
and foreign demand account for over 50 percent of real gross
domestic product fluctuations. Given Paraguay’s strong
dependence on agriculture, an analysis is also done for the
agricultural and non-agricultural sectors separately. The
analysis finds that non-agricultural gross domestic product
is to a large extent driven by external shocks, which
account for over 50 percent of its volatility. In contrast,
the volatility in agricultural gross domestic product is
primarily due to shocks to domestic variables, mainly shocks
to agricultural output. A further difference between the
sectors is that shocks to government consumption are more
important for agricultural gross domestic product, while
shocks to the domestic real interest rate play a larger role
in the volatility of non-agricultural gross domestic
product. Second, the paper investigates the sources of
business cycle fluctuations through the lens of a
neoclassical growth model with an agricultural and
non-agricultural sector. The analysis finds some signs of
improvements, as labor market distortions have declined,
firms’ access to credit improved, and agricultural
efficiency rose over time. Nevertheless, challenges remain,
as gaps in labor and capital returns between agriculture and
non-agriculture remain large, efficiency in the
non-agricultural sector shows no signs of improvement, and
households’ access to finance has deteriorated. |
| format |
Working Paper |
| author |
Hnatkovska, Viktoria Koehler-Geib, Friederike |
| author_facet |
Hnatkovska, Viktoria Koehler-Geib, Friederike |
| author_sort |
Hnatkovska, Viktoria |
| title |
Business Cycles Accounting for Paraguay |
| title_short |
Business Cycles Accounting for Paraguay |
| title_full |
Business Cycles Accounting for Paraguay |
| title_fullStr |
Business Cycles Accounting for Paraguay |
| title_full_unstemmed |
Business Cycles Accounting for Paraguay |
| title_sort |
business cycles accounting for paraguay |
| publisher |
World Bank, Washington, DC |
| publishDate |
2015 |
| url |
http://documents.worldbank.org/curated/en/2015/06/24577785/business-cycles-accounting-paraguay http://hdl.handle.net/10986/22157 |
| _version_ |
1764450307178233856 |
| spelling |
okr-10986-221572021-04-23T14:04:07Z Business Cycles Accounting for Paraguay Hnatkovska, Viktoria Koehler-Geib, Friederike MONETARY POLICY CAPITAL MARKETS PRODUCTION MARKET DISTORTIONS LAGS INTERNATIONAL CAPITAL FOREIGN INVESTORS INCOME INTEREST EXPECTATIONS ASSET PRICES INFLATIONARY EXPECTATIONS EMERGING ECONOMIES INTEREST RATE REAL GDP EXCHANGE DISCOUNT RATE INSURER LIQUIDITY DEVELOPING COUNTRIES EXPORTS MARGINAL PRODUCT POLITICAL ECONOMY DEVELOPING ECONOMIES PORTFOLIO FISCAL POLICY WORLD DEVELOPMENT INDICATORS WELFARE WORLD MARKETS VARIABLES DOMESTIC PRICE FACTORS OF PRODUCTION CAPITAL STOCK PRICE TAX INPUTS PAYMENTS WEALTH SAVING PUBLIC REGISTRY AGRICULTURAL OUTPUT TRENDS CENTRAL BANK DEVELOPMENT LABOR MARKET CAPITAL ALLOCATION FISCAL POLICIES INFLUENCE MARGINAL PRODUCTS VOLATILE ECONOMIES TRADE BALANCE TOTAL FACTOR PRODUCTIVITY SAVINGS PRODUCTION STRUCTURE DEVELOPMENT ECONOMICS LOW-INCOME COUNTRIES VOLATILITIES LOW INTEREST RATES INTEREST RATE SHOCK PRODUCTIVITY INTEREST RATES INTEREST RATE SHOCKS MIDDLE-INCOME ECONOMIES NATURAL DISASTERS NET EXPORTS DEBT FINANCIAL FLOWS OPEN ECONOMY REAL INTEREST RATE GLOBAL BUSINESS CAPITAL STOCKS INVENTORIES UTILITY AVERAGING GROSS DOMESTIC PRODUCT COMMODITY PRICE ECONOMIC RESEARCH TAXES INVESTMENT DECISIONS EQUITY INFLATION EXPECTATIONS INVESTORS PRODUCTIVITY GROWTH CONSUMPTION HUMAN CAPITAL CAPITAL WAGES VOLATILITY MARKET CONDITIONS FUTURE VALUE PRODUCTION FUNCTIONS CREDIT FORMAL ANALYSIS MACROECONOMICS DEMAND OUTPUT GAP UTILITY FUNCTION WORKING CAPITAL ECONOMIC FLUCTUATIONS ECONOMY AGRICULTURE CONSUMERS CAPITAL FLOWS PRICE FLUCTUATIONS TAX RATES SHARES FINANCIAL INFLOWS BENCHMARK ECONOMIC THEORY PAYROLL TAXES CREDIT BUREAU PRODUCTION FUNCTION ECONOMICS CAPITAL RETURNS OUTPUT PRICE MOVEMENTS ENFORCEMENT BUSINESS CYCLES ECONOMIC DEVELOPMENT TRADE LOW-INCOME ECONOMIES GDP GOODS THEORY EMERGING ECONOMY GROWTH RATE INVESTMENT SHARE DEVELOPING ECONOMY AUTOREGRESSION FINANCIAL MARKETS CAPITAL INFLOWS GINI COEFFICIENT ECONOMIC TIME SERIES NOMINAL INTEREST RATE RAPID GROWTH COMMODITIES EXCHANGE RATE AVERAGE PRODUCTIVITY COMMODITY PRICES OPEN ECONOMIES LIQUID ASSETS COMMODITY STICKY WAGES POSITIVE EFFECTS MIDDLE INCOME COUNTRIES SMALL ECONOMY GLOBAL ECONOMIC PROSPECTS PRICES DEVELOPMENT POLICY This study investigates the role of domestic and external shocks in business cycle fluctuations in Paraguay during 1991–2012. Time-series methods and a structural model-based approach are used to conduct an integrated analysis of business cycles. First, structural vector autoregression is used to assess the role played by external factors and domestic shocks in driving fluctuations in gross domestic product through impulse response functions and variance decompositions. The analysis finds that external shocks such as terms of trade, world interest rate and foreign demand account for over 50 percent of real gross domestic product fluctuations. Given Paraguay’s strong dependence on agriculture, an analysis is also done for the agricultural and non-agricultural sectors separately. The analysis finds that non-agricultural gross domestic product is to a large extent driven by external shocks, which account for over 50 percent of its volatility. In contrast, the volatility in agricultural gross domestic product is primarily due to shocks to domestic variables, mainly shocks to agricultural output. A further difference between the sectors is that shocks to government consumption are more important for agricultural gross domestic product, while shocks to the domestic real interest rate play a larger role in the volatility of non-agricultural gross domestic product. Second, the paper investigates the sources of business cycle fluctuations through the lens of a neoclassical growth model with an agricultural and non-agricultural sector. The analysis finds some signs of improvements, as labor market distortions have declined, firms’ access to credit improved, and agricultural efficiency rose over time. Nevertheless, challenges remain, as gaps in labor and capital returns between agriculture and non-agriculture remain large, efficiency in the non-agricultural sector shows no signs of improvement, and households’ access to finance has deteriorated. 2015-07-14T21:15:42Z 2015-07-14T21:15:42Z 2015-06 Working Paper http://documents.worldbank.org/curated/en/2015/06/24577785/business-cycles-accounting-paraguay http://hdl.handle.net/10986/22157 English en_US Policy Research Working Paper;No. 7284 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Latin America & Caribbean Paraguay |