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A decade lost and found: Mexico and Chile in the 1980s

Bergoeing, R; Kehoe, PJ; Kehoe, TJ; Soto, R; (2002) A decade lost and found: Mexico and Chile in the 1980s. Review of Economic Dynamics , 5 (1) pp. 166-205. 10.1006/redy.2001.0150. Green open access

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Abstract

Chile and Mexico experienced severe economic crises in the early 1980s. This paper analyzes four possible explanations for why Chile recovered much faster than Mexico did. 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. Journal of Economic Literature Classification Numbers: E32, N16, O40.

Type: Article
Title: A decade lost and found: Mexico and Chile in the 1980s
Open access status: An open access version is available from UCL Discovery
DOI: 10.1006/redy.2001.0150
Publisher version: https://doi.org/10.1006/redy.2001.0150
Language: English
Additional information: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords: Chile, Mexico, growth accounting, total factor productivity, depression
UCL classification: UCL
UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
URI: https://discovery.ucl.ac.uk/id/eprint/10054412
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