The Growth-Interest Rate Cycle in the United States and its Consequences for Emerging Markets

29 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: March 2001

Abstract

At the time of writing there were widespread concerns about the health of the U. S. economy. There is conclusive evidence that the pace of growth has slowed, which has prompted the Federal Reserve to cut interest rates on two occasions (a total of 100 basis points thus far). As usual, when faced with this kind of turning point, analysts and policy makers alike wonder whether the United States will achieve a "soft landing" or whether the downturn is more serious and protracted in the worst scenario, the new weakness could signal the end of the new economy. Furthermore, recent inflation surprises have not been encouraging, as higher-than expected inflation numbers may curtail the Federal Reserve`s desire and ability to act counter cyclically.

Suggested Citation

Reinhart, Carmen M. and Calvo, Guillermo A. and Fernandez-Arias, Eduardo and Talvi, Ernesto, The Growth-Interest Rate Cycle in the United States and its Consequences for Emerging Markets (March 2001). IDB Working Paper No. 385. Available at SSRN: https://ssrn.com/abstract=1817256 or http://dx.doi.org/10.2139/ssrn.1817256

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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