International Prices Shocks under Stochastic Uncertainty
DOI:
https://doi.org/10.35319/lajed.201932399Keywords:
Macroeconomics of the open economy, fluctuations and economic cycleAbstract
Latin America has experienced a context of high volatility in its terms of trade in recent years. To analyze this phenomenon, a new way of modeling external prices is provided, which seeks to capture the uncertainty of the international market. A stochastic dynamic general equilibrium model is constructed and estimated with data from Bolivia. Finally, a simulation is carried out by introducing an export price shock and analyzing three different scenarios: conventional, low persistence shock and low variance shock. Macroeconomic transmission mechanisms are analyzed in the face of external shocks and how economic agents react to changes in uncertainty.
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