Commodity prices and business cycles in Paraguay

Abstract

Paraguay is a small open economy and net commodity exporter. The difference between commodity exports and imports has always been positive and remained on an upward trend since 1994. Net commodity exports scaled by GDP increased from around 4,8% in the second half of the 90s to approximately 10% in the last years. In addition, food commodities averaged 90% of total commodity exports in the period 1994-2017. In this paper, we build a Paraguayan specific commodity price index and quantify its relative importance as driver of business cycles in Paraguay.