2013年-世界发展银行全球_Growth_Volatility_in_Paraguay___Sources_Effects_and_Options_Volume_2_Supplementary_Volume_with_Selected_Background_Papers_87页_5mb

Summary of Report No. 78318-PY: Growth Volatility in Paraguay - Sources, Effects, and Options

Core Content

This report examines the sources, effects, and policy options for growth volatility in Paraguay, focusing on the period from 1994 to 2012. It analyzes the role of both domestic and external shocks in driving business cycle fluctuations and their impact on macroeconomic outcomes and equity.

Main Points

1. Business Cycle Volatility in Paraguay

• Paraguay used to be one of the less volatile economies in Latin America, but its GDP volatility increased significantly in the 2000s, becoming one of the most volatile in the region.
• During 1994–2012, the percentage standard deviation of GDP growth rate was 5.54, compared to 4.28 for the full period 1960–2012.
• Agricultural GDP is more volatile than non-agricultural GDP and aggregate GDP, with volatility increasing over time. In 1994–2012, agricultural GDP volatility was 8.36, more than 40% higher than non-agricultural GDP (5.97) and aggregate GDP (5.54).
• The share of agricultural GDP in total GDP rose from about 12% in the 1990s to over 18% by 2011, contributing to increased overall GDP volatility.
• Terms of trade (TOT) volatility also increased, with the percentage standard deviation rising from 11.61 to 15.70.

2. Sources of GDP Volatility

• External shocks account for over 50% of real GDP volatility in Paraguay. These include:
  • Terms of trade shocks
  • World interest rate shocks
  • Foreign demand shocks (from major trade partners: Argentina, Brazil, Chile, Uruguay, and the U.S.)
• Domestic shocks account for the remaining share of GDP volatility, including:
  • Government consumption and investment
  • Real interest rate
  • Trade balance
  • Investment
  • Agricultural and non-agricultural output

3. Sectoral Volatility Dynamics

• Agricultural GDP is primarily driven by domestic shocks, particularly productivity, weather, mechanization, and fertilizer price shocks.
• Non-agricultural GDP is more sensitive to external shocks, especially terms of trade and foreign demand.
• The correlation between GDP and terms of trade is negative (-0.56), while the correlation between GDP and foreign demand is positive (0.82).
• Agricultural GDP has a weak negative correlation with world interest rates, while non-agricultural GDP has a weak positive correlation.

4. Policy Implications

• Monetary and fiscal policies are procyclical in Paraguay, meaning they tend to amplify rather than dampen business cycle fluctuations.
• Government consumption is strongly procyclical (unconditional correlation of 0.85), while government investment is less so (correlation of 0.10).
• The procyclical nature of fiscal policy is consistent with findings in other developing countries, suggesting a pattern of fiscal behavior that may be exacerbated by political and economic factors.

5. Structural Model Analysis

• A structural model is used to analyze the underlying frictions or "wedges" that drive GDP volatility.
• Key wedges identified include:
  • Labor market distortions
  • Capital market frictions
  • Agricultural efficiency
  • Inter-sectoral allocation of labor and capital
• While some improvements have been observed (e.g., better access to credit and increased agricultural efficiency), significant challenges remain, including large gaps in returns between agriculture and non-agriculture and a lack of improvement in non-agricultural efficiency.

Key Findings

• External shocks (especially terms of trade and foreign demand) are the main drivers of GDP volatility in Paraguay.
• Agricultural GDP is more volatile and driven by domestic factors, whereas non-agricultural GDP is more influenced by external shocks.
• Fiscal policy in Paraguay is procyclical, with government consumption being the most significant contributor to GDP fluctuations.
• There is a strong positive correlation between GDP and foreign demand, and a negative correlation with terms of trade.
• The study highlights the need for policies that reduce sectoral imbalances and improve the efficiency of non-agricultural sectors and access to finance for households.

Conclusion

• The rise in Paraguay's GDP volatility is an all-encompassing phenomenon, affecting both domestic and external variables.
• Addressing the volatility requires a focus on structural reforms, including improving the efficiency of non-agricultural sectors, reducing labor and capital market distortions, and enhancing financial access for households.
• The study provides a foundation for understanding the dynamics of Paraguay's business cycles and offers insights into potential policy interventions to stabilize growth and improve equity.