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External debt and developing country growth


  • Robert B. Kahn
  • Ross Levine
  • Steven B. Kamin

    (Board of Governors of the Federal Reserve System (U.S.)
    International Bank for Reconstruction and Development
    Massachusetts Institute of Technology
    Bank für Internationalen Zahlungsausgleich)


This paper examines the question of how the path of real GDP in four important Latin American countries, Argentina, Brazil, Chile and Mexico, might have differed if the sharp run-up in borrowing during the late 1970s and early 1980s had not occurred. Specifically, we ask whether these countries are better off or worse off for having borrowed heavily prior to the debt crisis, and we attempt to gauge the extent to which they would have received greater benefits if policies that improve economic efficiency had been followed. A simple macroeconomic mode is developed, and the simulation results are compared to the historical outcomes.

Suggested Citation

  • Robert B. Kahn & Ross Levine & Steven B. Kamin, 1989. "External debt and developing country growth," International Finance Discussion Papers 352, Board of Governors of the Federal Reserve System (U.S.), revised 1989.
  • Handle: RePEc:fip:fedgif:352

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    References listed on IDEAS

    1. Carlos F. Diaz-Alejandro, 1984. "Latin American Debt: I Don't Think We Are in Kansas Anymore," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 15(2), pages 335-403.
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    Cited by:

    1. Edwin M. Truman, 1989. "U.S. policy on the problems of international debt," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Nov, pages 727-735.
    2. Erdal Karagol, 2002. "The Causality Analysis of External Debt Service and GNP : The Case of Turkey," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 2(1), pages 39-64.

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    Developing countries; Debt;


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