Real Macroeconomic Stability And The Capital Account In Chile And Colombia
In 1995, when contagion from the tequila crisis was spreading in Latin America, both Chile and Colombia were exempt from contagion and presented high rates of economic growth. Several analysts attribute this positive performance to the fact that both had undertaken prudential measures to avoid excessive exposure to short term capital flows and pressures towards excessive real exchange rate appreciation: Both countries were using a reserve requirement on short term foreign indebtedness, crawling-bands, and other instruments for reducing domestic vulnerability to capital flows. The parallelism between Chile and Colombia continued after the Asian crisis. In this period, despite the fact that short-term liabilities represented only a small share of foreign debt in both countries, vulnerability to the international financial crisis was high. In both, real interest rates rose sharply in 1998 and GDP growth was negative in 1999. The similarities between Chile and Colombia, however, do not go much farther. During the 1990s, GDP growth rates were very high in Chile while in Colombia they were below historical standards. Chile had fiscal surpluses and high private savings, while in Colombia there was a rapidly increasing fiscal deficit and falling domestic savings. This paper presents a comparative analysis of the macroeconomic policies of Chile and Colombia during the 1990s, in particular the exchange rate regimes, the capital account regulations, and the gestation and management of financial crises.. _______________ Paper prepared for the Project on Management of Volatility, Financial Globalization and Growth in Emerging Economies, coordinated by ECLAC with the support of the Ford Foundation. **Ffrench-Davis is Principal Regional Adviser of ECLAC and Professor of Economics of Universidad de Chile. Villar is Co-Director at the Board of Directors of Banco de la República of Colombia and Professor of Economics of Universidad de los Andes. The authors appreciate the valuable comments and suggestions of Guillermo Le Fort, Carlos Quenan and other participants at two ECLAC Seminars in Santiago and at a technical meeting of G-24 in Geneva. Opinions expressed herein are exclusively of the authors and not of the institutions in which they work
|Date of creation:||30 Jul 2004|
|Date of revision:|
|Contact details of provider:|| |
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.:
- Eliana Cardoso & Ilan Goldfajn, 1998.
"Capital Flows to Brazil: The Endogeneity of Capital Controls,"
IMF Staff Papers,
Palgrave Macmillan, vol. 45(1), pages 161-202, March.
- Eliane A. Cardoso & Ilan Goldfajn, 1997. "Capital Flows to Brazil; The Endogeneity of Capital Controls," IMF Working Papers 97/115, International Monetary Fund.
- Maurice Obstfeld, 1998.
"The Global Capital Market: Benefactor or Menace?,"
Journal of Economic Perspectives,
American Economic Association, vol. 12(4), pages 9-30, Fall.
- Maurice Obstfeld, 2000. "The Global Capital Market: Benefactor or Menace?," International Finance 0004001, EconWPA.
- Obstfeld, Maurice, 1998. "The Global Capital Market: Benefactor or Menace?," Center for International and Development Economics Research, Working Paper Series qt3kn3n2s8, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
- Maurice Obstfeld., 1998. "The Global Capital Market: Benefactor or Menace?," Center for International and Development Economics Research (CIDER) Working Papers C98-098, University of California at Berkeley.
- Maurice Obstfeld, 1998. "The Global Capital Market: Benefactor or Menace?," NBER Working Papers 6559, National Bureau of Economic Research, Inc.
- Ffrench-Davis, Ricardo & Larrain, Guillermo, 2002.
"How Optimal are the Extremes? Latin American Exchange Rate Policies During the Asian Crisis,"
Working Paper Series
UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
- Ffrench-Davis, Ricardo & Larraín, Guillermo, 2003. "How optimal are the extremes?: Latin American exchange rate policies during the Asian crisis," Copublicaciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 1797, December.
- Edwards, Sebastian, 2002.
"The great exchange rate debate after Argentina,"
The North American Journal of Economics and Finance,
Elsevier, vol. 13(3), pages 237-252, December.
- De Gregorio, Jose & Edwards, Sebastian & Valdes, Rodrigo O., 2000.
"Controls on capital inflows: do they work?,"
Journal of Development Economics,
Elsevier, vol. 63(1), pages 59-83, October.
- Ffrench-Davis, Ricardo & Ocampo, José Antonio, 2001. "The globalization of financial volatility: challenges for emerging economies," Copublicaciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 1700, December.
- Adolfo Barajas & Roberto Steiner, 2002. "Credit Stagnation in Latin America," IMF Working Papers 02/53, International Monetary Fund.
- S Berg, 2001. "Trends In Racial Fiscal Incidence In South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 69(2), pages 243-268, 06.
- Manuel Agosin & Ricardo French-Davis, 1997. "Managing capital inflows in Chile," Estudios de Economia, University of Chile, Department of Economics, vol. 24(2 Year 19), pages 297-326, December.
When requesting a correction, please mention this item's handle: RePEc:col:000094:003416. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Clorith Angélica Bahos Olivera)
If references are entirely missing, you can add them using this form.