Measuring External Risks for Peru : Insights from a Macroeconomic Model for a Small Open and Partially Dollarized Economy / Fei Han.

Format:

Book

Government document

Author/Creator:

Han, Fei.

Series:

IMF Working Papers; Working Paper ; No. 2014/161

IMF Working Papers

Language:

English

Subjects (All):

Economic development.

International finance.

International Monetary Fund.

Investments, Foreign--Risk management--Peru--Econometric models.

Peru--Foreign economic relations--China.

Peru--Foreign economic relations--United States.

Local Subjects:

Economic development.

International finance.

International Monetary Fund.

Investments, Foreign--Risk management--Peru--Econometric models.

Peru--Foreign economic relations--China.

Peru--Foreign economic relations--United States.

Physical Description:

1 online resource (49 p.)

Place of Publication:

Washington, D.C. : International Monetary Fund, 2014.

Language Note:

English

Summary:

This paper quantifies the effects of external risks for Peru, with particular attention to two major external risks, China’s investment slowdown and the U.S. monetary policy tightening. In particular, a macroeconomic model for a small open and partially dollarized economy is developed and estimated for Peru to measure the risk spillovers, and simulate domestic macroeconomic responses in different scenarios with these two external risks. The simulation results suggest that Peru’s output is vulnerable to both risks, particularly the U.S. monetary policy tightening. Simulations also highlight the importance of higher exchange rate flexiblity and a lower degree of dollarization, which could help mitigate the negative spillover effects of these external risks.

Contents:

Cover Page; Title Page; Copyright Page; Abstract; Contents; Tables; Figures; I. Introduction; II. A Macroeconomic Model for a Small Open and Partially Dollarized Economy; III. Data and Estimation; IV. Scenarios and Simulations; A1. External Shocks and Simulation Scenarios; A2. Peru's Macroeconomic Responses: Impact of External Shocks; A3. Peru's Macroeconomic Responses with Exogenous Exchange Rates: Impact of External Shocks; A4. Peru's Macroeconomic Responses with a Lower Degree of Dollarization: Impact of External Shocks; V. Concluding Remarks

A1. Estimation Resutls: Aggregate Demand EquationA2. Estimation Resutls: Expectations-Augmented Phillips Curve; A3. Estimation Resutls: Monetary Policy Rule; A4. Estimation Resutls: Exchange Rate Expectation Equation; Appendix; References; Footnotes

Notes:

Description based upon print version of record.

Description based on print version record.

ISBN:

9781498386753

149838675X

9781498384414

1498384412