A Decade Lost and Found: Mexico and Chile in the 1980s
AbstractChile and Mexico experienced severe economic crises in the early 1980s. This paper analyzes four possible explanations for why Chile recovered much faster than did Mexico. Comparing data from the two countries allows us to rule out a monetarist explanation, an explanation based on falls in real wages and real exchange rates, and a debt overhang explanation. Using growth accounting, a calibrated growth model, and economic theory, we conclude that the crucial difference between the two countries was the earlier policy reforms in Chile that generated faster productivity growth. The most crucial of these reforms were in banking and bankruptcy procedures.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8520.
Date of creation: Oct 2001
Date of revision:
Publication status: published as Bergoeing, Raphael, Patrick J. Kehoe, Timothy J. Kehoe and Raimundo Soto. "A Decade Lost And Found: Mexico And Chile In The 1980s," Review of Economic Dynamics, 2002, v5(1,Jan), 166-205.
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Other versions of this item:
- Raphael Bergoeing & Patrick J. Kehoe & Timothy J. Kehoe & Raimundo Soto, 2002. "A Decade Lost and Found: Mexico and Chile in the 1980s," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(1), pages 166-205, January.
- Raphael Bergoeing & Patrick J. Kehoe & Raimundo Soto, 2001. "A Decade Lost and Found: Mexico and Chile in the 1980s," Working Papers Central Bank of Chile 107, Central Bank of Chile.
- Raphael Bergoeing & Patrick J. Kehoe & Timothy J & Kehoe & Raimundo Soto, 2001. "A decade lost and found: Mexico and Chile in the 1980s," Staff Report 292, Federal Reserve Bank of Minneapolis.
- Raphael Bergoeing & Patrick J. Kehoe & Timothy J. Kehoe & Raimundo Soto, 2001. "A Decade Lost and Found: Mexico and Chile in the 1980s," Documentos de Trabajo 110, Centro de Economía Aplicada, Universidad de Chile.
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- N16 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Latin America; Caribbean
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-10-09 (All new papers)
- NEP-DGE-2001-10-09 (Dynamic General Equilibrium)
- NEP-IFN-2001-10-09 (International Finance)
- NEP-LAM-2001-10-01 (Central & South America)
- NEP-PKE-2001-10-09 (Post Keynesian Economics)
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