The authors analyze the response of private and public investment to external shocks, macroeconomic adjustment, and structural reform in three sets of countries: (a) countries that pursued structural reform and liberalization in Latin American in the 1970s (Chile) or the 1980s (Mexico and...

This paper discusses the following issues regarding the pace of private domestic investment, its prospects for recovery, and its role in adjustment programs of developing countries: (a) the relationship between stabilization measures affected through aggregate demand management and the need for...

The author reviews recent literature on capital formation and economic reform and looks at the cycle of private investment that occurs during adjustment. He identifies three phases in the response of private investment to adjustment programs: initial contraction, a long pause, and sustained...

Devaluation affects investment because of its effect on the real supply price of capital goods; the real price of imported inputs, w???????????????hich together with capital goods are used to produce output; the real product wage and thereby profitability and investment; real income, which...

The authors use an accelerator model to assess the determinants of private investment and to analyze how adjustment policies affect those determinants. Their model emphasizes the effect of resource constraints on private investment behavior, including that arising from foreign exchange...