Existing results on the contribution of terms of trade and world interest rate shocks to output fluctuations in small open economies range from less than 10% to almost 90%. We argue that an identification problems lies at the heart of these vastly different results. In this paper, we overcome...

The transition to a market driven development strategy in Latin America for more than a decade has redefined business strategies and reshaped the state`s traditional role as guarantor of employment, stability, and protection. These changes, plus the move to create more flexible labor markets in...