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Stabilization and the Rate of Capital Formation in Latin America, 1983-90: An Empirical Assessment

Author

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  • Miguel D. Ramirez

    (Trinity College)

Abstract

This paper attempts to go beyond the usual "stylized facts" reported by critics of IMF-sponsored stabilization programs implemented in Latin America over the past ten years. Its econometric evidence suggests that repeated devaluations of thee domestic currency, indiscriminate cuts in government spending, particularly capital expenditures, and huge net transfers of resources out of the region have all had a statistically negative impact on private capital formation. The results give further credence to arguments for discontinuing the forceful and simultaneous application of conventional adjustment measures, because they lead, more often than not, to chronic stagflation.

Suggested Citation

  • Miguel D. Ramirez, 1995. "Stabilization and the Rate of Capital Formation in Latin America, 1983-90: An Empirical Assessment," Eastern Economic Journal, Eastern Economic Association, vol. 21(4), pages 523-538, Fall.
    • Handle: RePEc:eej:eeconj:v:21:y:1995:i:4:p:523-538
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    More about this item

    Keywords

    Capital Expenditure; Capital; Stabilization;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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