A PANEL VAR ANALYSIS OF THE DYNAMIC IMPACT OF UNDERVALUATION ON ECONOMIC GROWTH IN LATIN AMERICAN COUNTRIES

Chavez, Carlos

doi:10.1590/198055272714

Carlos Chavez

Research Associate, Universidad Nacional Mayor de San Marcos. Lima, Peru.

http://orcid.org/0000-0002-5885-7723

Corresponding author: Carlos Chavez E-mail address: carlos.chavez2@unmsm.edu.pe

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Figure 1
Undervaluation shocks to economic growth without covariates according to the first GDP per capita measure

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Figure 2
Undervaluation shocks to economic growth without covariates according to the second GDP per capita measure

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Figure 3
Undervaluation shocks to economic growth without covariates according to the third GDP per capita measure

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Figure 4
Undervaluation shocks to economic growth considering macroeconomics variables according to the first GDP per capita measure

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Figure 5
Undervaluation Shocks on economic growth with macroeconomic covariates using the second GDP per capita measure

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Figure 6
Undervaluation shocks on economic growth with macroeconomic covariates using the third GDP per capita measure

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Figure 7
Undervaluation shocks on economic growth with human capital covariates using the first GDP per capita measure

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Figure 8
Undervaluation shocks on economic growth with human capital covariates using the second GDP per capita measure

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Figure 9
Undervaluation shocks on economic growth with human capital covariates using the third GDP per capita measure

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Figure 10
Undervaluation on economic growth with all covariates using the second GDP per capita measure

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Figure 11
Undervaluation shocks on economic growth with all covariates using the third GDP per capita measure

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Figure 12
Undervaluation shocks on economic growth with all covariates using the third GDP per capita measure

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Table 1
First stage: estimating undervaluation

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Table 2
Second Stage: estimating impacts without covariates

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Table 3
Second Stage: estimating impacts without covariates

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Table 4
Second Stage: estimating impacts without covariates

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Table 5
Second Stage: Estimating impacts with macroeconomics covariates

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Table 6
Second Stage: Estimating impacts with macroeconomics covariates

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Table 7
Second Stage: Estimating impacts with macroeconomics covariates

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Table 8
Second Stage: Estimating impacts with human capital covariates

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Table 9
Second Stage: Estimating impacts with human capital variables

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Table 10
Second Stage: Estimating impacts with human capital variables

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Table 11
Second Stage: estimating impacts with all covariates

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Table 12
Second Stage: Estimating impacts with all covariates

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Table 13
Second Stage: Estimating impacts with all covariates

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Table 14
Panel VAR-Granger causality Wald test (without covariates)

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Table 15
Panel VAR-Granger causality Wald test (Macroeconomic variables)

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Table 16
Panel VAR-Granger causality Wald test (Human capital covariates)

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Table 17
List of countries

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Table 18
List of Variables

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10)

	Real Exchange Rate: First GDP measure
	(1)	(2)	(3)
GDP per capita ₁	−0.61***	0.87***	0.23**
GDP per capita ₁	(−9.31)	(4.51)	(3.03)
N	418	418	418
Adj. Rsquared	0.204	−0.004	0.703
	Real Exchange Rate: Second GDP measure
	(1)	(2)	(3)
GDP per capita ₂	−0.78***	0.23	−0.32***
GDP per capita ₂	(−8.24)	(2.48)	(−4.04)
N	418	418	418
Adj. Rsquared	0.161	−0.012	0.709
	Real Exchange Rate: Third GDP measure
GDP per capita ₃	−0.65***	−0.50***	−0.50***
GDP per capita ₃	(−5.70)	(−4.33)	(−12.88)
N	418	418	418
adj. R-sq	0.332	−0.008	0.790

Variables	First GDP per capita measure
	(1)	(2)	(3)
Economic Growth_i,t-1	0.13***	0.07	0.38***
Economic Growth_i,t-1	(2.33)	(1.63)	(6.829
Economic Growth_i,t-2	−0.06	−0.09***	−0.08
Economic Growth_i,t-2	(−1.51)	(−2.95)	(−1.73)
GDP per capita_i,t-1	0.37***	0.50***	0.25***
GDP per capita_i,t-1	(11.21)	(19.34)	(7.7)
GDP per capita_i,t-2	−0.37	−0.50	−0.25
GDP per capita_i,t-2	(11.17)	(19.52)	(7.78)
Undervaluation _i,t-1	−0.01***	0.02***	0.18***
Undervaluation _i,t-1	(−2.17)	(3.42)	(7.54)
Undervaluation _i,t-2	−0.00	−0.02	−0.19
Undervaluation _i,t-2	(−0.05)	(−3.70)	(−7.62)
Observations	385	385	385
Overidentification Test (p-value)	0.223	0.067	0.12
Number of instruments	72	72	72
Stability Condition	Yes	Yes	Yes

Variables	Second GDP per capita measure
	(1)	(2)	(3)
Economic Growth_i,t-1	−1.12	−3.14***	−3.95***
Economic Growth_i,t-1	(−1.15)	(−4.96)	(−2.74)
Economic Growth_i,t-2	0.02	−0.11***	−0.090
Economic Growth_i,t-2	(0.64)	(−4.35)	(−1.55)
GDP per capita_i,t-1	0.02	0.04***	0.05**
GDP per capita_i,t-1	(1.73)	(5.74)	(3.18)
GDP per capita_i,t-2	−0.02	−0.04***	−0.05**
GDP per capita_i,t-2	(−1.74)	(−5.72)	(−3.18)
Undervaluation _i,t-1	−0.01	−0.02**	0.21***
Undervaluation _i,t-1	(−1.54)	(−3.00)	(7.66)
Undervaluation _i,t-2	−0.01***	0.04***	−0.23***
Undervaluation _i,t-2	(−5.06)	(6.20)	(−8.13)
Observations	385	385	385
Overidentification Test (p-value)	0.183	0.022	0.897
Number of instruments	72	72	72
Stability Condition	Yes	No	Yes

Variables	Third GDP per capita measure
	(1)	(2)	(3)
Economic Growth_i,t-1	0.123**	0.35***	0.43***
Economic Growth_i,t-1	(3.23)	(9.73)	(9.17)
Economic Growth_i,t-2	−0.04	−0.09**	−0.13***
Economic Growth_i,t-2	(−1.18)	(−3.18)	(−3.98)
GDP per capita_i,t-1	0.10***	0.14***	0.05***
GDP per capita_i,t-1	(11.40)	(11.99)	(4.43)
GDP per capita_i,t-2	−0.09***	−0.13***	−0.05***
GDP per capita_i,t-2	(−11.15)	(−11.80)	(−4.40)
Undervaluation _i,t-1	0.04***	0.10***	0.05**
Undervaluation _i,t-1	(18.41)	(10.19)	(3.15)
Undervaluation _i,t-2	−0.04*	−0.10***	−0.08***
Undervaluation _i,t-2	(−2.38)	(−10.14)	(−5.08)
Observations	385	385	385
Overidentification Test (p-value)	0.276	0.006	0.185
Number of instruments	72	72	72
Stability Condition	Yes	Yes	Yes

Variables	First GDP per capita measure
	(1)	(2)	(3)
Economic Growth_i,t-1	0.50***	0.15**	0.28***
Economic Growth_i,t-1	(3.35)	(3.13)	(4.84)
Economic Growth_i,t-2	−0.10	−0.05	−0.08*
Economic Growth_i,t-2	(−0.97)	(−1.21)	(−2.04)
GDP per capita_i,t-1	−0.16	0.24***	0.14***
GDP per capita_i,t-1	(−1.28)	(9.11)	(4.98)
GDP per capita_i,t-2	0.18	−0.19***	−0.10***
GDP per capita_i,t-2	(1.40)	(−7.18)	(−3.66)
Undervaluation _i,t-1	0.01	0.03**	0..09***
Undervaluation _i,t-1	(1.07)	(3.04)	(4.35)
Undervaluation _i,t-2	0.01	−0.02*	−0.06**
Undervaluation _i,t-2	(0.79)	(−2.22)	(−3.23)
Government Spending _i,t	−0.03	−0.07***	−0.06***
Government Spending _i,t	(−1.27)	(−8.87)	(−6.36)
Terms of trade _i,t	0.02	0.06***	0.06***
Terms of trade _i,t	(0.51)	(9.08)	(7.81)
Monetary Aggregates _i,t	0.00	−0.04***	−0.02**
Monetary Aggregates _i,t	(0.09)	(−4.23)	(−2.62)
Observations	385	385	385
Overidentification Test (p-value)	0.649	0.083	0.696
Number of instruments	75	75	75
Stability Condition	Yes	Yes	No

Variables	Second GDP per capita measure
	(1)	(2)	(3)
Economic Growth_i,t-1	−5.19***	−4.48***	−5.41***
Economic Growth_i,t-1	(−3.78)	(−5.14)	(−4.38)
Economic Growth_i,t-2	−0.04	−0.08*	−0.05
Economic Growth_i,t-2	(−0.94)	(−2.38)	(−1.08)
GDP per capita_i,t-1	5.49***	4.83***	5.83***
GDP per capita_i,t-1	(3.96)	(5.55)	(4.69)
GDP per capita_i,t-2	−5.45***	−4.77***	−5.78***
GDP per capita_i,t-2	(−3.94)	(−5.49)	(−4.65)
Undervaluation _i,t-1	−0.02	0.00	0.13***
Undervaluation _i,t-1	(−0.46)	(0.12)	(6.47)
Undervaluation _i,t-2	−0.00	0.01	−0.09***
Undervaluation _i,t-2	(−0.70)	(0.84)	(−5.20)
Government Spending _i,t	−0.08***	−0.08***	−0.08***
Government Spending _i,t	(−7.10)	(−14.10)	(−8.01)
Terms of trade _i,t	0.04***	0.06***	0.05***
Terms of trade _i,t	(5.28)	(9.17)	(6.71)
Monetary Aggregates _i,t	0.00	−0.02**	−0.00
Monetary Aggregates _i,t	(0.58)	(−3.04)	(−1.06)
Observations	385	385	385
Overidentification Test (p-value)	0.724	0.229	0.811
Number of instruments	75	75	75
Stability Condition	Yes	Yes	Yes

Variables	Third GDP per capita measure
Economic Growth_i,t-1	0.26***	0.54***	0.46***
Economic Growth_i,t-1	(7.51)	(11.54)	(6.86)
Economic Growth_i,t-2	0.03	−0.15***	−0.14**
Economic Growth_i,t-2	(1.43)	(−3.53)	(−2.92)
GDP per capita_i,t-1	0.02*	−0.12***	−0.03*
GDP per capita_i,t-1	(2.23)	(−8.07)	(−2.03)
GDP per capita_i,t-2	−0.01	0.15***	0.05***
GDP per capita_i,t-2	(−1.62)	(9.80)	(3.34)
Undervaluation _i,t-1	0.03***	−0.09***	0.10***
Undervaluation _i,t-1	(17.08)	(−6.40)	(4.08)
Undervaluation _i,t-2	0.01***	0.11***	−0.11***
Undervaluation _i,t-2	(4.47)	(8.52)	(−4.93)
Government Spending _i,t	−0.09***	−0.13***	−0.09***
Government Spending _i,t	(−20.06)	(−15.25)	(−6.21)
Terms of trade _i,t	0.01***	0.07***	0.07***
Terms of trade _i,t	(3.76)	(10.31)	(7.89)
Monetary Aggregates _i,t	0.03***	−0.02**	−0.01
Monetary Aggregates _i,t	(8.10)	(−3.21)	(−1.53)
Observations	385	385	385
Overidentification Test (p-value)	0.294	0.227	0.305
Number of instruments	75	75	75
Stability Condition	No	Yes	No

Variables	First GDP per capita measure
	(1)	(2)	(3)
Economic Growth_i,t-1	0.12*	0.25***	0.05
Economic Growth_i,t-1	(2.21)	(5.25)	(0.75)
Economic Growth_i,t-2	−0.14***	−0.04	−0.03
Economic Growth_i,t-2	(−4.03)	(−0.97)	(−0.64)
GDP per capita_i,t-1	0.24***	0.12**	0.04
GDP per capita_i,t-1	(5.73)	(3.17)	(0.85)
GDP per capita_i,t-2	−0.27***	−0.25***	−0.21***
GDP per capita_i,t-2	(−7.76)	(−8.09)	(−5.26)
Undervaluation _i,t-1	0.00	0.10***	0.10***
Undervaluation _i,t-1	(1.41)	(8.91)	(4.99)
Undervaluation _i,t-2	−0.00	−0.10***	0.02
Undervaluation _i,t-2	(−0.44)	(−8.11)	(0.99)
Average Labor Hours _i,t	0.02***	0.01***	0.01**
Average Labor Hours _i,t	(4.48)	(3.29)	(2.81)
Human Capital index _i,t	0.09	0.44***	0.62**
Human Capital index _i,t	(1.67)	(7.61)	(9.24)
Productivity _i,t	0.04	0.17***	0.18***
Productivity _i,t	(1.51)	(6.62)	(6.07)
Observations	385	385	385
Overidentification Test (p-value)	0.307	0.155	0.414
Number of instruments	75	75	75
Stability Condition	Yes	Yes	Yes

Variables	Second GDP per capita measure
	(1)	(2)	(3)
Economic Growth_i,t-1	3.88***	5.05***	2.29
Economic Growth_i,t-1	(3.37)	(3.70)	(1.31)
Economic Growth_i,t-2	−0.06	−0.12**	−0.08
Economic Growth_i,t-2	(−1.70)	(−3.06)	(−1.74)
GDP per capita_i,t-1	−3.42**	−4.80***	−2.02
GDP per capita_i,t-1	(−2.97)	(−3.47)	(−1.14)
GDP per capita_i,t-2	3.41**	4.65***	1.89
GDP per capita_i,t-2	(2.96)	(3.36)	(1.07)
Undervaluation _i,t-1	0.02**	0.03***	0.09***
Undervaluation _i,t-1	(2.87)	(4.33)	(4.55)
Undervaluation _i,t-2	−0.02**	−0.02**	−0.03
Undervaluation _i,t-2	(−3.00)	(−2.70)	(−1.59)
Average Labor Hours _i,t	0.01**	0.01**	−0.00
Average Labor Hours _i,t	(3.25)	(2.70)	(−0.63)
Human Capital index _i,t	0.01	0.35***	0.31***
Human Capital index _i,t	(0.47)	(13.19)	(8.76)
Productivity _i,t	−0.01	0.08***	0.04**
Productivity _i,t	(−1.24)	(6.01)	(2.98)
Observations	385	385	385
Overidentification Test (p-value)	0.354	0.120	0.747
Number of instruments	75	75	75
Stability Condition	Yes	Yes	Yes

Variables	Third GDP per capita measure
	(1)	(2)	(3)
Economic Growth_i,t-1	0.36***	0.28***	0.30***
Economic Growth_i,t-1	(7.27)	(9.62)	(6.16)
Economic Growth_i,t-2	0.00	−0.13***	−0.05
Economic Growth_i,t-2	(0.10)	(−6.42)	(−1.51)
GDP per capita_i,t-1	0.04***	−0.13***	0.00
GDP per capita_i,t-1	(4.16)	(−13.44)	(0.99)
GDP per capita_i,t-2	−0.05***	0.13***	−0.03***
GDP per capita_i,t-2	(−5.16)	(13.83)	(−3.33)
Undervaluation _i,t-1	0.02***	−0.20***	0.09***
Undervaluation _i,t-1	(9.52)	(−21.12)	(5.18)
Undervaluation _i,t-2	−0.00	0.26***	−0.06***
Undervaluation _i,t-2	(−1.20)	(25.29)	(−3.65)
Average Labor Hours _i,t	−0.01	0.26***	−0.01
Average Labor Hours _i,t	(−0.17)	(6.11)	(−0.10)
Human Capital index _i,t	0.05**	0.14***	0.12***
Human Capital index _i,t	(3.13)	(9.80)	(6.54)
Productivity _i,t	0.01	−0.00	−0.02
Productivity _i,t	(1.68)	(−0.26)	(−1.84)
Observations	385	385	385
Overidentification Test (p-value)	0.328	0.330	0.263
Number of instruments	75	75	75
Stability Condition	Yes	Yes	Yes

Variables	First GDP per capita measure
	(1)	(2)	(3)
Economic Growth_i,t-1	0.09	0.32***	0.17
Economic Growth_i,t-1	(1.35)	(4.59)	(1.58)
Economic Growth_i,t-2	−0.21***	−0.07	−0.05
Economic Growth_i,t-2	(−5.04)	(−1.28)	(−0.77)
GDP per capita_i,t-1	0.27***	0.10*	0.04
GDP per capita_i,t-1	(6.09)	(2.05)	(0.61)
GDP per capita_i,t-2	−0.17***	−0.16***	−0.13*
GDP per capita_i,t-2	(−5.01)	(−3.85)	(−2.10)
Undervaluation _i,t-1	0.01**	0.15***	0.14***
Undervaluation _i,t-1	(3.25)	(7.58)	(4.75)
Undervaluation _i,t-2	−0.00	−0.14***	−0.01
Undervaluation _i,t-2	(−0.20)	(−6.59)	(−0.36)
Average Labor Hours _i,t	0.00	0.01**	0.01
Average Labor Hours _i,t	(0.28)	(2.96)	(1.73)
Human Capital index _i,t	−0.13*	0.23***	0.32***
Human Capital index _i,t	(−2.54)	(4.55)	(4.65)
Productivity _i,t	−0.05	0.086**	0.06
Productivity _i,t	(−1.92)	(3.17)	(1.56)
Government Spending _i,t	−0.09***	−0.02	−0.01
Government Spending _i,t	(−6.86)	(−1.76)	(−0.58)
Terms of trade _i,t	0.05***	0.01	−0.00
Terms of trade _i,t	(5.12)	(0.89)	(−0.18)
Monetary Aggregates _i,t	−0.04***	0.00	0.01
Monetary Aggregates _i,t	(−4.40)	(0.23)	(0.89)
Observations	385	385	385
Overidentification Test (p-value)	0.476	0.151	0.870
Number of instruments	78	78	54
Stability Condition	Yes	Yes	Yes

Variables	Second GDP per capita measure
	(1)	(2)	(3)
Economic Growth_i,t-1	−7.85***	−6.84***	−5.42***
Economic Growth_i,t-1	(−4.86)	(−6.36)	(−3.88)
Economic Growth_i,t-2	−0.11**	−0.09*	−0.06
Economic Growth_i,t-2	(−2.61)	(−1.97)	(−1.42)
GDP per capita_i,t-1	8.12***	7.00***	5.69***
GDP per capita_i,t-1	(5.01)	(6.56)	(4.06)
GDP per capita_i,t-2	−8.08***	−7.07***	−5.70***
GDP per capita_i,t-2	(−4.97)	(−6.60)	(−4.06)
Undervaluation _i,t-1	0.01	0.05***	0.11***
Undervaluation _i,t-1	(1.54)	(6.28)	(5.94)
Undervaluation _i,t-2	−0.00	−0.03***	−0.04*
Undervaluation _i,t-2	(−0.53)	(−4.38)	(−2.40)
Average Labor Hours _i,t	0.01	0.01***	0.00
Average Labor Hours _i,t	(1.24)	(4.00)	(0.07)
Human Capital index _i,t	−0.04	0.21***	0.16***
Human Capital index _i,t	(−1.16)	(6.58)	(6.20)
Productivity _i,t	0.06**	0.16***	0.06***
Productivity _i,t	(3.24)	(9.51)	(3.67)
Government Spending _i,t	−0.05***	−0.01	−0.05***
Government Spending _i,t	(−4.16)	(−1.75)	(−4.58)
Terms of trade _i,t	0.05***	0.08***	0.06***
Terms of trade _i,t	(6.57)	(10.27)	(6.07)
Monetary Aggregates _i,t	−0.01	−0.02*	−0.03***
Monetary Aggregates _i,t	(−0.86)	(−2.43)	(−3.85)
Observations	385	385	385
Overidentification Test (p-value)	0.840	0.177	0.702
Number of instruments	77	77	77
Stability Condition	Yes	Yes	Yes

Variables	Third GDP per capita measure
	(1)	(2)	(3)
Economic Growth_i,t-1	0.30***	0.22***	0.13**
Economic Growth_i,t-1	(5.70)	(6.52)	(2.62)
Economic Growth_i,t-2	0.03	−0.16***	−0.06
Economic Growth_i,t-2	(0.83)	(−6.45)	(−1.48)
GDP per capita_i,t-1	−0.06***	−0.17***	−0.02
GDP per capita_i,t-1	(−6.45)	(−15.31)	(−1.56)
GDP per capita_i,t-2	0.05***	0.19***	0.01
GDP per capita_i,t-2	(6.17)	(15.76)	(0.88)
Undervaluation _i,t-1	−0.02**	−0.21***	0.09***
Undervaluation _i,t-1	(−3.28)	(−17.39)	(6.48)
Undervaluation _i,t-2	0.02**	0.26***	−0.04***
Undervaluation _i,t-2	(2.93)	(24.52)	(−3.97)
Average Labor Hours _i,t	−0.03	0.18***	0.06
Average Labor Hours _i,t	(−0.57)	(4.48)	(0.78)
Human Capital index _i,t	−0.03	0.01	−0.07***
Human Capital index _i,t	(−1.47)	(0.66)	(−3.32)
Productivity _i,t	0.10***	0.11***	0.13***
Productivity _i,t	(8.10)	(11.43)	(11.36)
Government Spending _i,t	−0.11***	−0.05***	−0.01
Government Spending _i,t	(−10.97)	(−7.71)	(−0.94)
Terms of trade _i,t	0.08***	0.12***	0.15***
Terms of trade _i,t	(11.14)	(18.57)	(17.41)
Monetary Aggregates _i,t	0.02***	0.00	0.02***
Monetary Aggregates _i,t	(6.24)	(0.69)	(4.69)
Observations	385	385	385
Overidentification Test (p-value)	0.253	0.408	0.636
Number of instruments	77	77	77
Stability Condition	Yes	Yes	Yes

	First GDP	Second GDP	Third GDP
	per capita measure	per capita measure	per capita measure
First undervaluation measure	0.011	0.000	0.000
Second undervaluation measure	0.001	0.000	0.000
Third undervaluation measure	0.000	0.000	0.000

	First GDP	Second GDP	Third GDP
	per capita measure	per capita measure	per capita measure
First undervaluation measure	0.500	0.247	0.000
Second undervaluation measure	0.000	0.005	0.000
Third undervaluation measure	0.000	0.000	0.000

	First GDP	Second GDP	Third GDP
	per capita measure	per capita measure	per capita measure
First undervaluation measure	0.275	0.110	0.000
Second undervaluation measure	0.000	0.000	0.000
Third undervaluation measure	0.000	0.000	0.000

Variable	Definition	Source
First Economic Growth per capita	Expenditure-side real GDP at chained PPPs to compare relative living standards across countries and over time divided by population	Penn World Table v9.1
Second Economic Growth per capita	GDP per capita is gross domestic product divided by the mid-year population. GDP is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. It is calculated without making deductions for the depreciation of fabricated assets or for the depletion and degradation of natural resources divided by population. Data are in constant 2010 U.S. dollars.	World Bank
Third Economic Growth per capita	GDP per capita is the gross domestic product divided by the mid-year population. GDP is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. It is calculated without making deductions for the depreciation of fabricated assets or for the depletion and degradation of natural resources divided by population. Data are in current U.S. dollars.	World Bank
Nominal Exchange Rate	The official exchange rate refers to the exchange rate determined by national authorities or to the rate determined in the legally sanctioned exchange market. It is calculated as an annual average based on monthly averages (local currency units relative to the U.S. dollar).	World Bank
Producer Price Index (U.S)	Average change over time in the selling prices received by domestic producer for their output.	IMF
Consumer Price Index	The consumer price index reflects changes in the cost to the average consumer of acquiring a basket of goods and services that may be fixed or changed at specified intervals, such as yearly ones. The Laspeyres formula is generally used. Data are period averages.	World Bank
PPP	The purchasing power parity conversion factor is the number of units of the currency of a country required to buy the same amounts of goods and services in the domestic market as U.S. dollar would buy in the United States. This conversion factor is for GDP. For most economies, PPP figures are extrapolated from the 2011 International Comparison Program (ICP) benchmark estimates or imputed using a statistical model based on the 2011 ICP. For 47 high- and upper middle-income economies, conversion factors are provided by Eurostat and the Organisation for Economic Co-operation and Development (OECD).	World Bank
First Real Exchange Rate	The first RER is the Nominal Exchange Rate divided by PPP	Own Estimation
Second Real Exchange Rate	This RER is the multiplication of the Nominal Exchange Rate and the Producer Price Index divided by Consumerr Price Index	Own Estimation
Third Real Exchange Rate	Inverse of Price level of the CGDPo, price level of USA GDPo in 2011=1	Penn World Table v9.1
Government Spend	The general government final consumption expenditure (formerly general government consumption) includes all government current expenditures for purchases of goods and services (including compensation of employees). It also includes most expenditures on national defense and security but excludes government military expenditures that are part of government capital formation.	World Bank
Terms of Trade	The terms of trade effect equals capacity to import less exports of goods and services in constant prices. Data are in constant local currency.	World Bank
Monetary Aggregates	Broad money (IFS line 35L..ZK) is the sum of currency outside banks; demand deposits other than those of the central government; the time, savings, and foreign currency deposits of resident sectors other than those of the central government; bank and traveler’s checks; and other securities such as deposit certificates and commercial paper.	World Bank
Average Labor Hours	Average annual hours worked by engaged persons	Penn World Table v9.1
Human Capital Index	Human Capital Index	Penn World Table v9.1
Productivity	Welfare-relevant Total Factor Productivity at constant prices (2011 =1)	Penn World Table v9.1

[1] Corresponding author: Carlos Chavez E-mail address: carlos.chavez2@unmsm.edu.pe

Bolivia	Brazil	Chile
Colombia	Costa Rica	Dominican Republic
Guatemala	Mexico	Paraguay
Perú	Uruguay

Brasil

Brasil

A PANEL VAR ANALYSIS OF THE DYNAMIC IMPACT OF UNDERVALUATION ON ECONOMIC GROWTH IN LATIN AMERICAN COUNTRIES

COMO É O IMPACTO DINÂMICO DA SUBVALORIZAÇÃO NO CRESCIMENTO ECONÔMICO DOS PAÍSES LATINO-AMERICANOS? UMA ANÁLISE VAR DE PAINEL

ABSTRACT