Policy-Driven Productivity in Chile and Mexico in the 1980s and 1990s

14 Pages Posted: 11 Apr 2002 Last revised: 19 Apr 2002

See all articles by Raphael Bergoeing

Raphael Bergoeing

affiliation not provided to SSRN

Patrick J. Kehoe

Federal Reserve Bank of Minneapolis - Research Department; University of Minnesota - Twin Cities - Department of Economics; National Bureau of Economic Research (NBER)

Timothy J. Kehoe

University of Minnesota - Twin Cities - Department of Economics; National Bureau of Economic Research (NBER)

Raimundo Soto

Pontifical Catholic University of Chile - Institute of Economics

Date Written: April 2002

Abstract

Both Chile and Mexico experienced severe economic crises in the early 1980s, but Chile recovered much faster than did Mexico. Using growth accounting and a calibrated dynamic general equilibrium model, we conclude that the crucial determinant of this difference between the two countries was the faster productivity growth in Chile, rather than higher investment or employment. Our hypothesis is that this difference in productivity was driven by earlier policy reforms in Chile, the most crucial of which were in banking and bankruptcy procedures. We propose a theoretical framework in which government policy affects both the allocation of resources and the composition of firms.

Suggested Citation

Bergoeing, Raphael and Kehoe, Patrick J. and Kehoe, Timothy J. and Soto, Raimundo, Policy-Driven Productivity in Chile and Mexico in the 1980s and 1990s (April 2002). NBER Working Paper No. w8892. Available at SSRN: https://ssrn.com/abstract=307129

Raphael Bergoeing

affiliation not provided to SSRN ( email )

Patrick J. Kehoe (Contact Author)

Federal Reserve Bank of Minneapolis - Research Department ( email )

90 Hennepin Avenue
Minneapolis, MN 55480
United States
612-204-5525 (Phone)
612-204-5515 (Fax)

University of Minnesota - Twin Cities - Department of Economics ( email )

271 19th Avenue South
Minneapolis, MN 55455
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Timothy J. Kehoe

University of Minnesota - Twin Cities - Department of Economics ( email )

271 19th Avenue South
1169 Management & Economics
Minneapolis, MN 55455
United States
612-625-1589 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Raimundo Soto

Pontifical Catholic University of Chile - Institute of Economics ( email )

Casilla 76
Correo 17
Santiago
Chile

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