The Impact of Emerging Asia´s Demand on the Pacific Alliance Countries

Abstract

This article presents new evidence on the economic links between Asia and Latin America. Estimates from a Bayesian vector autoregression model show that key macroeconomic variables of the Pacific Alliance countries (Mexico, Peru, Chile, and Colombia) have a significant response to shocks on Emerging Asia’s demand. The spillover effects show that Peru is the country that is most vulnerable to income shocks in Emerging Asia. Nevertheless, developed economies’ shocks are still significant when it comes to explain the macroeconomic performances of Colombia, Chile, and especially, Mexico.