Oviedo, Pedro Marcelo
This paper studies the interest-rate-driven business cycles of a small open economy (SOE). For than end a costly operated banking system is added to the standard real-business-cycles model. Banks are the only domestic agents considered worthy of credit in international capital markets. They borrow from the rest of the world and lend domestically in a competitive credit market. Existent quantitative models of business cycles in SOE's indicate that interest-rate shocks are unable to cast the kind of output variability produced by productivity or terms-of-trade shocks. Contrary to this finding, it seems that the macroeconomic performances of several SOE's are tightly...
Miotti, Luis; Plihon, Dominique; Quenan, Carlos
América Latina ha participado de manera importante en la expansión del mercado de obligaciones en euros. Este fenómeno constituye una faceta del proceso de intensificación de las relaciones financieras entre Europa y América Latina (caracterizado también por el auge de las inversiones extranjeras directas de origen europeo y por la creciente implantación de los bancos europeos en América Latina), claramente perceptible desde los años 90. Las implicaciones de este proceso a mediano y largo plazo son numerosas. En este trabajo se tratará principalmente uno de los aspectos menos abordados hasta el presente : las repercusiones en los regímenes cambiarios de...
Mendoza, Enrique G.
The 1990s emerging-markets crises were characterized by sudden reversals in inflows of foreign capital followed by unusually large declines in current account deficits, private expenditures, production, and prices of nontradable goods relative to tradables. This paper shows that these Sudden Stops can be the outcome of the equilibrium dynamics of a flexible-price economy with imperfect credit markets. Foreign debt is denominated in units of tradables and a liquidity constraint links credit-market access to the income generated in the nontradables sector and the relative price of nontradables. Sudden Stops occur when real shocks of foreign or domestic origin, or policy-induced shocks...
Levy Yeyati, Eduardo; Sturzenegger, Federico
We study the relationship between exchange rate regimes and economic growth for a sample of 154 countries over the post-Bretton Woods period (1974-1999), using a new de facto classification of regimes based on the actual behavior of the relevant macroeconomic variables. In contrast with previous studies, we find that, for developing countries, less flexible exchange rate regimes are strongly associated with slower growth, as well as with greater output volatility. For industrial countries, on the contrary, regimes do not appear to have any significant impact on growth. The results are robust to endogeneity corrections and a number of alternative specifications...
Este artigo defende a proposta de que o Brasil deveria seguir outros países e adotar uma regra fiscal, mediante a exigência de um superávit primário do Governo Central de pelo menos 1,5 % do PIB. Essa regra contribuiria para dar um caráter duradouro às mudanças recentes apresentadas pelo país no que se refere às contas públicas, reforçando a melhora institucional representado pela Lei de Responsabilidade Fiscal. A exigência é consistente com um superávit primário do setor público da ordem de 2,0 % do PIB.
Galindo, Arturo; Micco, Alejandro
We develop a model in which the elasticity of credit to exogenous shocks depends on creditor rights regulations. We show that an increase in creditor protection reduces the elasticity of credit supply to exogenous shocks, and hence the amplitude of the credit cycle. Using an extended set of a measure of creditor rights protection in the spirit of La Porta et al. (1998), we find that stricter creditor rights regulations not only increase the breadth of the credit market but also reduce the volatility of the credit cycle.
Ennis, Huberto María
In this paper we study dollarization as a commitment device that the Central Bank could use to avoid getting involved in an undesirable banking-sector bailout. We show how a political process could induce an equilibrium outcome that differs from the one that a benevolent Central Bank would want to implement. Dollarization then could be used to restore the economy to the benevolent outcome. In so doing though, political support for dollarization becomes essential. For our benchmark case, dollarization does not have enough support to be actually implemented. But when we study the interaction among dollarization, the introduction of international banks,...
Druck, Pablo; Morón, Eduardo
This paper discusses dollarization from the perspective of the relation between country and devaluation risk. In the absence of balance sheet effects, we find that a full dollarization of an economy increases its country risk. On the other hand, when balance sheet effects are present, the full dollarization could reduce country risk. The link between these two risks is based on the government's financial needs. In this paper government devalue the currency for fiscal purposes. Consequently, a full dollarization closes this avenue transferring the whole cost to bond holders. This paper stresses the idea that dollarization is at the very...
Burdisso, Tamara; Catena, Marcelo; D'Amato, Laura
Over the last decade the Argentine banking industry has been subject to important regulatory changes, increased internationalization and restructuring. The way in which this process has affected the degree of competition is subject to discussion in Argentina, and it has been argued, along the lines of the structure-conduct-performance paradigm (SCP), that increased concentration could have undermined competition in banking markets. But, while acording to the former approach concentration is necessarily related to poor competition, the new industrial organization (NIO) approach, that relies on firms profit maximization behavior, has emphasized the weaknesses of relying on concentration measures to draw conclusions about...
Carrera, Jorge Eduardo; Cusolito, Ana Paula; Féliz, Mariano; Panigo, Demian Tupac
En el presente trabajo se realiza un aporte a la literatura sobre volatilidad y riesgo país para posibilitar la correcta comparación entre países. Presentamos una metodología para evaluar el riesgo que incorpora: detección endógena de quiebres estructurales múltiples diferenciando sus tipos, identificación del tipo de shocks predominante a través del orden de integración fraccional depurado de quiebres estructurales y determinación de la volatilidad ajustada más apta para caracterizar la economía. Se aplica la metodología al PBI de 9 países desarrollados y 9 emergentes, para el período 1980-1999 con datos trimestrales. Si bien los países desarrollados tienen menos quiebres estructurales que...
Bebczuk, Ricardo Nestor
A great deal of empirical work has convincingly shown that there is a positive association between financial development and economic growth, and some recent work has even provided evidence that the former causes the latter. What is less clear is the identification of the actual transmission channel. This paper is an attempt in this direction, with particular emphasis placed on the role of the financial system in alleviating informational asymmetries. While research in this field has highlighted the benefits of well developed financial systems, the observation that internal funds (retained earnings plus depreciation) constitute by far the main source of...
Kydland, Finn E.; Zarazaga, Carlos
The 1980s have been dubbed the “lost decade” in Latin America because during those harsh ten years GDP per capita declined in that region at an average annual rate of 1.5%, in contrast with the 2.3% and 1.8% increases of the immediately preceding and immediately following decades, respectively.
Chart 1 shows not only that Argentina did not escape that general trend, but also that the decline had started much earlier, in the mid 1970s. If the size of a downturn is measured as the percentage change from the highest GDP per capita after the last time that variable was below trend...