Spillovers of US uncertainty shocks to Nicaragua
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Date
2021
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Abstract
Given that Nicaragua is an economy closely linked to that of the United States, uncertainty shocks in the United States could be relevant and transmitted to the Nicaraguan economy. Thus, this work aims to identify the effects of uncertainty shocks in the US on prices and Nicaraguan economic activity through a VAR model, finding slight decreases in prices and a significant and persistent contraction for economic activity. Then, when conducting a counterfactual analysis on potential transmission mechanisms, the decrease in prices is transmitted through remittances and the evolution of international prices. Meanwhile, credit to the private sector represents an important channel through which the effects are transmitted to economic activity. Thus, policies aimed at mitigating credit frictions can reduce the magnitude of the negative effect on economic activity.
Description
Tesis (Magíster en Economía)--Pontificia Universidad Católica de Chile, 2021