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January 25, 2026EconomiesOpen Access

External Shocks, Fiscal Transmission Mechanisms, and Macroeconomic Volatility: Evidence from Ecuador

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Authors

IDIgor Ernesto Diaz-KovalenkoUniversidad Estatal de Milagro

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Implication

Investigates external shocks affecting macroeconomic volatility in Ecuador, highlighting fiscal policy implications.

Key Points

  • The study aims to explore how external shocks affect macroeconomic volatility through fiscal transmission mechanisms in Ecuador.
  • Developed a dynamic stochastic general equilibrium model calibrated for the Ecuadorian economy.
  • Incorporated elements of procyclical fiscal behavior and public capital accumulation.
  • Conducted counterfactual simulations to analyze fiscal policy design and institutional constraints.
  • Productivity shocks are significant drivers of output fluctuations.
  • External revenue shocks contribute notably to macroeconomic volatility via fiscal channels.
  • Procyclical fiscal responses worsen fluctuations by dampening public investment and slowing capital accumulation.
  • Alternative fiscal configurations can reduce short-run volatility based on institutional spending efficiency.

Cite This Study

Igor Ernesto Diaz-Kovalenko (2026) studied this question.

synapsesocial.com/papers/6975b229feba4585c2d6da49https://doi.org/10.3390/economies14020036
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