Abstract

DABUS, Carlos D.; DELBIANCO, Fernando  and  MONTERUBBIANESI, Pablo D.. INSTABILITY, GROWTH AND ECONOMIC PERFORMANCE: EVIDENCE OF 17 LATIN AMERICAN COUNTRIES 1980-2014. Semest. Econ. [online]. 2016, vol.19, n.41, pp.117-136. ISSN 0120-6346.  https://doi.org/10.22395/seec.v19n41a5.

This paper studies the effect of economic stability on the growth of 17 Latin American countries between 1980-2014 for three different economic growth groups; low, middle and high. The hypothesis is that a more unstable economy, meaning, a larger inflation and product volatility, negatively affects investments, which affects growth. In order to contrast this hypothesis, a random effect model is estimated using a panel of 17 Latin American countries in a 35-year period, in which countries are classified according to the k-median cluster method. Results indicate that instability affects negatively the economic performance of the region, particularly countries with a smaller growth. Because of this, the recommendation for such cases is the application of anti-cyclic and anti-inflationary policies.

Keywords : Economic cycles; economic growth; anti-cyclic policies; Latin America.

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