Short-run and long-run effects of copper price on Junín’s economic growth

Abstract

Our research used a SVAR to analyze the underlying copper price shocks, that is, a commodity shock for the Junín department in Peru. The results of a short- and long-run SVAR were based on traditional matrix constraints that capture the fact that domestic shocks do not affect international prices. The main conclusion is that before the pandemic a shock in the international price of copper decreases economic growth and inflation in the department of Junín in Peru, after the pandemic the opposite happens. As a result of the model, the short and long-run effects of the international copper price on the main macroeconomic variables of Junín in Peru are statistically significant. Before the pandemic, the dynamics of the international copper price reflected the existence of the curse of mining resources in copper institutions. Before the pandemic, a percentage increase in the international price of copper decreased economic growth, reflecting the existence of the mining resource curse in copper institutions. After the pandemic, a percentage increase in the price of copper increases economic growth by up to 0.0488%, then decreases over time, noting the transitory effect of economic recovery and poor management of mineral resources.