| Danilo Spinola
Cycles, Economic Structures and External Constraints: A Structuralist Study on the Causes of Economic Volatility in Latin America
Bart Verspagen & Neil Foster-McGregor
The main objective of this thesis is to understand the causes behind the endogenous volatile behavior of Latin American economies in a New-Structuralist perspective. Many distinct authors argue that the repetition of strong boom-bust dynamics is a structural problem in the economic development of Latin America. In this research we search for the underlying causes of this behavior, discussing volatility as an endogenous phenomenon, intrinsic to the characteristics of these fragile economies.We assess this research question following empirical and theoretical approaches. The empirical approach initially consists on identifying the main characteristics of economic growth cycles in Latin America from real growth data. Secondly, we test the assumptions of the models developed in this thesis. Thirdly we check how the economic system behaves when there are exogenous shocks to some specific variables. The theoretical part of this research develops itself from growth models, offering explanations of the causes of Latin American endogenous volatility. In terms of the theoretical framework, this thesis is based on three main classic pillars, all somehow related to the Structuralist theory: (1) The Goodwin model, composed of endogenous cycles that emerge in the relationship between economic growth and income distribution; (2) The Balance of Payments Constrained Model (BPCM), that relates economic growth to external constraints, and (3) The Prebisch-Singer hypothesis (center-periphery framework), relating economic growth and development traps to the position of a developing economy in the international division of labor (global economic system).
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