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Why Aren't Savings Rates in Latin America Procyclical?

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Author Info
Philip R. Lane
Aaron Tornell

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Abstract

We document a striking empirical regularity: Latin American savings rates are as a rule substantially less procyclical than for OECD countries and in some cases are actually countercyclical. We build a non-representative agent intertemporal macroeconomic model that rationalizes this phenomenon as the equilibrium outcome of interaction between multiple groups that have common access to aggregate income. We conclude by suggesting that institutional reform may hold the key to improving the cyclical behavior of savings in Latin America.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6502.

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Date of creation: Apr 1998
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Handle: RePEc:nbr:nberwo:6502

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Find related papers by JEL classification:
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Michael Gavin & Roberto Perotti, 1997. "Fiscal Policy in Latin America," NBER Chapters, in: NBER Macroeconomics Annual 1997, Volume 12, pages 11-72 National Bureau of Economic Research, Inc. [Downloadable!]
  2. Mauricio Cardenas & Zeinab Partow, 1998. "Oil, Coffee and the Dynamic Commons Problems in Colombia," RES Working Papers 3033, Inter-American Development Bank, Research Department. [Downloadable!]
  3. Atish R. Ghosh & Jonathan David Ostry, 1994. "Export Instability and the External Balance in Developing Countries," IMF Working Papers 94/8, International Monetary Fund.
  4. Philip R. Lane & Aaron Tornell, 1997. "Voracity and Growth," Harvard Institute of Economic Research Working Papers 1807, Harvard - Institute of Economic Research. [Downloadable!]
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  5. Edwards, Sebastian, 1996. "Why are Latin America's savings rates so low? An international comparative analysis," Journal of Development Economics, Elsevier, vol. 51(1), pages 5-44, October. [Downloadable!] (restricted)
  6. Lane, Philip R & Tornell, Aaron, 1996. " Power, Growth, and the Voracity Effect," Journal of Economic Growth, Springer, vol. 1(2), pages 213-41, June.
  7. Eswar Prasad & Pierre-Richard Agénor & C. John McDermott, 1999. "Macroeconomic Fluctuations in Developing Countries - Some Stylized Facts," IMF Working Papers 99/35, International Monetary Fund.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Marco Battaglini & Stephen Coate, 2008. "Fiscal Policy over the Real Business Cycle: A Positive Theory," NBER Working Papers 14047, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Raghuram G. Rajan & Ioannis Tokatlidis, 2005. "Dollar Shortages and Crises," International Journal of Central Banking, International Journal of Central Banking, vol. 1(2), September. [Downloadable!]
    Other versions:
  3. G. C. Lim & Paul D. McNelis, 2008. "Cyclical Government Spending, Income Inequality and Welfare in Small Open Economies," Melbourne Institute Working Paper Series wp2008n18, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne. [Downloadable!]
  4. Lavan Mahadeva & Javier Gómez Pineda, . "The international cycle and Colombian monetary policy," Borradores de Economia 557, Banco de la Republica de Colombia. [Downloadable!]
    Other versions:
  5. Miguel Braun & Luciano di Gresia, 2003. "Hacia un sistema de seguro social eficaz en América Latina: la importancia de una política fiscal anticíclica," RES Working Papers 4334, Inter-American Development Bank, Research Department. [Downloadable!]
  6. Kashif Mansori, 2001. "Economic Liberalization and Savings Rates," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  7. Miguel Braun & Luciano di Gresia, 2003. "Towards Effective Social Insurance in Latin America: The Importance of Countercyclical Fiscal Policy," RES Working Papers 4333, Inter-American Development Bank, Research Department. [Downloadable!]
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