ECONOMIC CYCLES IN GROWTH. A STUDY FOR ECUADOR

Abstract

This research analyzes the relationship between economic activity and the different economic policies such as monetary, fiscal and external, represented by the variables inflation, tax income and the index of terms of trade. The economic cycle was analyzedthrough the application of the Hodrick and Prescott filter on the real GDP of Ecuador, adding an analysis of the stylized facts of the variables. Finally, an estimate of the Autoregressive Vector Model (VAR) is carried out, where the causal relationship between the variables is evidenced and how the different macroeconomic shocks affect economic growth. It is determined through the impulse response function analysis that a monetary shock through the inflation variable generates a negative impact; on the other hand, the external and fiscal sector shock through the terms of trade index and tax revenues respectively, turned out to be positive with permanent effects and their economic fluctuations are more pronounced.