Macroeconomic foundations and the Great Moderation in Latin America

Abstract

This article analyzes the macroeconomic behavior of Latin American countries between 1970-2010, focusing on 14 macroeconomic variables in 17 countries.  The statistics show an accentuated convergence in the region's macroeconomic results, particularly over the last decades.  This convergence shows that particular strategies of political economy cannot be associated with primary macroeconomic disequilibria.   The reduction of the registered differences among the group of studied economies and among the three groups of countries in which the 17 countries have been divided shows that factors common to all of them, in the form of positive symmetrical external shocks or similar strategies regarding fiscal policies and structural and institutional reforms of similar nature,  are in fact the principle determinants of this macroeconomic convergence.