Threshold Effects of Terms of Trade on Latin American Growth

Authors

Andre C. Vianna
Andre V. Mollick, The University of Texas Rio Grande Valley

Document Type

Article

Publication Date

2021

Abstract

This paper investigates nonlinear relationships between terms of trade volatility (totvol) and economic growth in 14 Latin American economies from 1997 to 2014. In the 2000s, Latin American countries experienced accelerated economic growth often attributed to commodity price booms. We split the sample into two regimes based on totvol thresholds determined by bootstrap techniques. Fixed-effects, instrumental variable and dynamic panel regressions address endogeneity in trade-growth, subject to traditional economic channels such as domestic investment, population growth, exchange rate, government size, and institutions. We find statistically significant thresholds and stronger trade-growth links during the 2000s commodity boom and in larger economies.

Comments

© 2021 Elsevier B.V. All rights reserved. Original published version available https://doi.org/10.1016/j.ecosys.2021.100882

Recommended Citation

Vianna, Andre C., and Andre V. Mollick. 2021. “Threshold Effects of Terms of Trade on Latin American Growth.” Economic Systems, July, 100882. https://doi.org/10.1016/j.ecosys.2021.100882.

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.

Publication Title

Economic Systems

DOI

10.1016/j.ecosys.2021.100882