Financial Instruments To Hedge Commodity Price Risk For Developing Countries

This paper investigates the linkages between the financial markets in the United States and the seven largest Latin American economies, focusing on the impact of shocks originating in the U.S. stock, bond, and currency markets. After documenting that cross-country linkages were different in "tranquil" and "turbulent" times within the sample, the authors find that: (i) for stock markets, recent episodes of market turbulence stood out from preceding ones (ii) currency markets in Latin America exhibited a decrease in cross-market linkages (iii) the external bond markets in Latin America remained on a trend of weakening linkages with U.S. corporate bonds.