Are Business Cycles Different in Asia and Latin America? (Electronic book text)

Understanding business cycles is the first step in designing appropriate stabilization policies (Lucas, 1977). Although there is no a priori reason to think that business cycles are different in industrialized and developing countries, the faster growth and greater volatility in developing countries combined with the recent emphasis in the literature on the connection between trends and cycles, suggests that there could be some interesting differences. The objective of this paper is to compare the properties of the business cycles in Asia and in Latin America using a structural VAR approach that encompasses equilibrium and disequilibrium views of the business cycle. We also compare our results to the evidence for industrial countries.