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Heading into Trouble: A Comparison of the Latin American Crises and the Euro Area’s Current Crisis

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  • Manuel Ramos -Francia
  • Ana María Aguilar-Argaez
  • Santiago García-Verdú
  • Gabriel Cuadra-García

    (Banco de México)

Abstract

We compare the experience of Latin American external debt crises, in particular the one in the 80s, with the current European one. We do so with the aim of shedding some light on the needed adjustment mechanisms. We argue for the need of much larger debt relief in Europe. To address the moral hazard problems that would arise, we propose providing such relief conditional on the reduction of both the fiscal and the current account deficits to zero as a commitment signal

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Bibliographic Info

Article provided by Centro de Estudios Monetarios Latinoamericanos in its journal Monetaria.

Volume (Year): XXXV (2013)
Issue (Month): 1 (January-june)
Pages: 87-165

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Handle: RePEc:cml:moneta:v:xxxv:y:2013:i:1:p:87-165

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Cited by:
  1. Dodig, Nina & Herr, Hansjörg, 2014. "Previous financial crises leading to stagnation: Selected case studies," IPE Working Papers 33/2014, Berlin School of Economics and Law, Institute for International Political Economy (IPE).

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