Have the economies of Latin America become less volatile as a result of the economic stabilization and structural reforms implemented during the past decade? The answer is a qualified “yes. ” The reforms have helped, but more needs to be done to ensure the macroeconomic stability required...

Recent empirical and theoretical literature on the impact of real exchange rate devaluations on economic performance questions the traditional expansionary effect generated within standard Mundell-Fleming models. Contractionary devaluations may arise when firms face maturity or currency...

This paper compares growth conditions in China and Latin America to assess fears that China will displace Latin America in the coming decades. China`s strengths include the size of the economy, macroeconomic stability, abundant low-cost labor, the rapid expansion of physical infrastructure, and...

We suggest that foreign banks may represent a trade-off for their developing country hosts. A portfolio model is developed to show that a more diversified international bank may be one of lower, overall risk and less susceptible to funding shocks but may react more to shocks that affect expected...

This paper discusses the economic performance of Latin America in the last decade, paying special attention to growth and the financial sector. In particular, it shows that external factors, such as like U. S. interest rates and the business cycle, play a key role in capital inflows, investment,...

This paper explores the institutional determinants of economic growth in Latin America by taking advantage of recent empirical research that employs subjective and objective measures to test for a possible "Northian" explanation that links institutional quality and economic growth. I provide a...

After decades of trial, error, and occasional regress, the pieces of a successful Latin American economic model can be seen scattered among the leading economies of the region. The most traditional macroeconomic maladies of the emerging world, such as chronic fiscal imbalances and monetary...

The use of income distribution indicators in the economics literature has increased considerably in recent years. This work relies on household surveys from 18 LAC countries to take a step back from the use of these indicators, and explore what`s behind the numbers, and what information they...

Financial turmoil is becoming a fact of life in Latin America. The 1990s have been characterized by enormous volatility in the magnitude and cost of capital flows. The correlation of capital swings across disparate countries suggests that the quality of emerging market policies in addition to...

New empirical evidence suggests that high levels of income inequality constrain rather than encourage growth. While some explanations involve relationships between inequality and political systems, this paper focuses on the microeconomic behavior of poor households. When returns to labor are...