Growth and External Financing in Latin America

42 Pages Posted: 21 Apr 2011

See all articles by Carmen M. Reinhart

Carmen M. Reinhart

Peter G. Peterson Institute for International Economics; National Bureau of Economic Research (NBER)

Guillermo A. Calvo

Columbia University - School of International & Public Affairs (SIPA); National Bureau of Economic Research (NBER)

Eduardo Fernandez-Arias

Inter-American Development Bank (IDB)

Ernesto Talvi

Centro de Estudios de la Realidad Economica y Social (CERES)

Date Written: August 2001

Abstract

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, and growth. As a result, economic growth in the region tends to be fragile and exhibits a high degree of co-movement, i. e. , high cross-country output correlation. This last feature exacerbates fragility, because there is little room for mutual insurance within Latin America in case a country suffers a bad shock, and finance during downturns has to come primarily from outside the region.

Suggested Citation

Reinhart, Carmen M. and Calvo, Guillermo A. and Fernandez-Arias, Eduardo and Talvi, Ernesto, Growth and External Financing in Latin America (August 2001). IDB Working Paper No. 384. Available at SSRN: https://ssrn.com/abstract=1817255 or http://dx.doi.org/10.2139/ssrn.1817255

Carmen M. Reinhart (Contact Author)

Peter G. Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Guillermo A. Calvo

Columbia University - School of International & Public Affairs (SIPA) ( email )

420 West 118th Street
New York, NY 10027
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Eduardo Fernandez-Arias

Inter-American Development Bank (IDB) ( email )

1300 New York Avenue, NW
Research Department
Washington, DC 20577
United States
202-623-3783 (Phone)
202-623-2481 (Fax)

Ernesto Talvi

Centro de Estudios de la Realidad Economica y Social (CERES) ( email )

Antonio Costa 3476
11300 Montevideo
Uruguay
(5982)628-7703 / 628 76 44 (Phone)
(5982)622-0526 (Fax)

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