Output co-movement between Latin America and the United States: the export structure matters

Using panel data analysis for the period 1961–2014, this paper finds that output fluctuations in Latin America were especially synchronized with the US business cycle before the commodity price boom in the 2000s. In most recent years, China has become a more important geo-economic source of output fluctuations for the region. Furthermore, focusing on export-structure related aspects as mechanisms, evidence suggests that non-primary commodity exporters in Latin America, whose exports have mainly been destined for the US market, display an intensified output fluctuation co-movement with the US. These findings contribute to the understanding of the Latin American macroeconomic exposure to external shocks.