Labor market and Business Cycle shocks in Small Open Economies

Valencia

Congreso; XVII Arnoldshain Seminar; 2022

Universidad de Valencia - Universidad Jaume I - Universidad de Alicante

The purpose of this paper is to assess the importance of Terms of Trade (TOT) shocks on Business Cycle, specifically, on real GDP and employment in Peru during 2008 - 2019 from a global and sectoral perspective. Our main findings are: 1) there are evidences that TOT shocks have played an important role in the dynamics of the real GDP and (formal) employment in Peru, 2) Private Aggregate Investment seems to be a key element of the transmission of those shocks to the real Output and employment levels and 3) From sectoral/industry perspective, sectors with strong chains with exports and private investment such as mining, construction and manufacturing show the highest impact in terms of sectoral real GDP and employment