In the early 90’s a literature emerged emphasizing the role of external factors in explaining business cycle fluctuations in emerging countries. In particular changes in the terms of trade and world interest rates are generally viewed as the main external factors affecting these economies. Additionally part of this literature has also highlighted the role of financial frictions in explaining the propagation of external shocks where these frictions arise in the relationship between foreign lenders and domestic borrowers.
Attribution-NonCommercial-NoDerivs 3.0 Chile
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