publication . Article . 2002

Decades Lost and Found: Mexico and Chile since 1980 (*)

Raphael Bergoeing; Patrick J. Kehoe; Timothy J. Kehoe; Raimundo Soto;
Open Access
  • Published: 01 Jan 2002 Journal: Quarterly Review, volume 26 (issn: 0271-5287, Copyright policy)
  • Publisher: Federal Reserve Bank of Minneapolis
Abstract
Both Chile and Mexico experienced severe economic crises in the early 1980s, yet Chile recovered much faster than Mexico. This study analyzes four possible explanations for this difference and rules out three, explanations based on money supply expansion, real wage and real exchange rate declines, and foreign debt overhangs. The fourth explanation is based on government policy reforms in the two countries. Using growth accounting and a calibrated growth model, the study determines that the only policy reforms promising as explanations are those that primarily affect total factor productivity, or how inputs are used, not the inputs themselves. Interpreting histor...
Subjects
free text keywords: Economic development, Monetary economics, Economics, Exchange rate, Total factor productivity, External debt, Wage, media_common.quotation_subject, media_common, Public policy, Bankruptcy, Growth accounting, Money supply
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publication . Article . 2002

Decades Lost and Found: Mexico and Chile since 1980 (*)

Raphael Bergoeing; Patrick J. Kehoe; Timothy J. Kehoe; Raimundo Soto;