The Impact of Macroeconomic Variables on the Paraguayan Economy

Authors

  • Maria Hernandez Universidad Nacional de Colombia

DOI:

https://doi.org/10.1229/tecempresarialjournal.v18i1.162

Abstract

The purpose of this study is to examine the impact of macroeconomic variables on the Paraguayan economy. The study employs quantitative methods and uses secondary data from the period of 2010 to 2020. The data analysis is performed using econometric techniques such as unit root tests, co-integration analysis, and error correction models. The results indicate that the Gross Domestic Product (GDP) is positively influenced by the government expenditure, inflation rate, and foreign direct investment (FDI). However, the interest rate and exchange rate have a negative impact on the GDP. Additionally, the study finds that the inflation rate is significantly influenced by the money supply, while the interest rate is affected by the inflation rate. The findings suggest that policymakers in Paraguay should focus on maintaining a stable inflation rate and exchange rate to foster economic growth. Furthermore, the government should encourage more FDI inflows to increase economic development. Overall, this study contributes to the literature on the Paraguayan economy and provides insights for policymakers, academics, and researchers.

References

Acemoglu, D., & Robinson, J. A. (2012). Why nations fail: The origins of power, prosperity, and poverty. Crown Business.

Alesina, A., & Rodrik, D. (1994). Distributive politics and economic growth. The Quarterly Journal of Economics, 109(2), 465-490.

Blattman, C., & Miguel, E. (2010). Civil war. Journal of Economic Literature, 48(1), 3-57.

Deaton, A., & Zaidi, S. (2002). Guidelines for constructing consumption aggregates for welfare analysis. The World Bank.

Dornbusch, R., Fischer, S., & Startz, R. (2015). Macroeconomics (12th ed.). McGraw-Hill Education.

Easterly, W. (2001). The elusive quest for growth: Economists' adventures and misadventures in the tropics. MIT Press.

Glaeser, E. L., La Porta, R., Lopez-de-Silanes, F., & Shleifer, A. (2004). Do institutions cause growth? Journal of Economic Growth, 9(3), 271-303.

Hausmann, R., Pritchett, L., & Rodrik, D. (2004). Growth accelerations. Journal of Economic Growth, 9(4), 303-329.

Krueger, A. O. (1974). The political economy of the rent-seeking society. American Economic Review, 64(3), 291-303.

Lucas, R. E. (1988). On the mechanics of economic development. Journal of Monetary Economics, 22(1), 3-42.

Mankiw, N. G. (2014). Principles of macroeconomics (7th ed.). Cengage Learning.

Rodrik, D. (2018). Straight talk on trade: Ideas for a sane world economy. Princeton University Press.

Romer, P. M. (1990). Endogenous technological change. Journal of Political Economy, 98(5), S71-S102.

Sachs, J. D., & Warner, A. M. (1997). Sources of slow growth in African economies. Journal of African Economies, 6(3), 335-376.

Stiglitz, J. E., & Walsh, C. E. (2006). Principles of macroeconomics (4th ed.). W. W. Norton & Company.

Published

2023-03-10

How to Cite

Hernandez, M. (2023). The Impact of Macroeconomic Variables on the Paraguayan Economy. TEC EMPRESARIAL, 18(1), 284–297. https://doi.org/10.1229/tecempresarialjournal.v18i1.162