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<p>Traditionally, the United States has been the major trading and financial partner of Latin America. However, since 2000 it has lost its hegemony in the region due to China’s growing influence. China’s emergence as a source of capital for Latin America has increasingly integrated both financial markets, potentially increasing the risk of volatility spillovers. Using a heterogeneous ARDL model, we study volatility transmission from the USA and China to six main Latin American stock markets over short-run and long-run horizons. Although the US volatility spillover has decreased over time, it is still more relevant than that of China. This finding remains after controlling for commodity price volatility. The identification of these dynamic patterns in the US and Chinese volatility spillovers can help investors to make more informed portfolio management decisions and can help policymakers in monitoring financial stability in the region.</p>

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Volatility spillovers from the United States and China to Latin American stock markets

  • 期刊论文

  • 出版模式：

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  • 发表日期：

    2026年7月31日

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  • Walter Bazán-Palomino,
  • Diego Winkelried

摘要

Traditionally, the United States has been the major trading and financial partner of Latin America. However, since 2000 it has lost its hegemony in the region due to China’s growing influence. China’s emergence as a source of capital for Latin America has increasingly integrated both financial markets, potentially increasing the risk of volatility spillovers. Using a heterogeneous ARDL model, we study volatility transmission from the USA and China to six main Latin American stock markets over short-run and long-run horizons. Although the US volatility spillover has decreased over time, it is still more relevant than that of China. This finding remains after controlling for commodity price volatility. The identification of these dynamic patterns in the US and Chinese volatility spillovers can help investors to make more informed portfolio management decisions and can help policymakers in monitoring financial stability in the region.