Chicago, Keynes and Fiscal Policy

During the first half of the 1930’s, the founders of the Chicago School of economics and John Maynard Keynes in England advocated public works and as a cure for unemployment and a way to overcome the Great Depression. Counter cyclical fiscal policy was seen as a feasible strategy to attenuate the phases of the economic cycle. The quantity theory of money coupled with the hypothesis of wage and price rigidity provided the theoretical underpinnings for this policy proposal. These economists argued that a monetary policy channeled through the banking system was ineffective. In particular, Chicago economists identified two key features that exemplified this restriction: the instability of the circulation velocity of money and the fragility and underdevelopment of the banking system and financial structure. Fiscal policy was thus advocated on the basis of market rigidities and the impotency of monetary policy. By the end of the decade both Chicago economists and Keynes had departed from this fiscal policy stance. The former became concerned with the inflationar

Financialization, Deindustrialization and Instability in Latin America

The paper analyzes the relation between premature deindustrialization in Latin America with what is termed premature financialization. Premature financialization is defined as a turn to finance, organized as an industrial concern, which is a vehicle for accumulation before the process of industrialization has reached maturity. This contrasts with developed countries where financialization occurs after an advanced stage of economic and social development is reached, and where the growth of the financial sector, beyond a certain threshold, can be detrimental to economic activity. The paper examines the consequences of premature financialization for investment, growth, and financial stability

Export promotion policies in CARICOM: main issues, effects and implications

Includes bibliographyThe purpose of this document is to describe, analyze and assess export promotion policies in the case of CARICOM economies. At the national level CARICOM economies are at different stages in their export promotion efforts ranging from countries such as Suriname where export promotion is a distant objective to Barbados where the authorities have decidedly adopted an upper income echelon approach to the development of tourism. The common denominators (with the exception of small size and the adoption fiscal incentives) that can characterize or encompass their export promotion experiences are the search for niche-markets, market segmentation and comparative advantage. An analysis of different national cases including, Barbados, Jamaica, Guyana, the Member States of the Organization of Eastern Caribbean States (OECS) and Suriname indicate that export promotion strategies and in particular the common denominators listed above are significantly shaped and determined by their different stages of economic and institutional development and also, and most important, by their economic structure. The analysis of export performance shows that the export promotion objectives have been, at most, partially fulfilled. CARICOM economies are still struggling to capture market-niches. More important these economies have, for the most part, lost market share in the United States and Europe, in spite of preferential market access conditions. Contrarily the intra-regional market has expanded significantly

Financial openness, financial fragility and policies for economic stability: a comparative analysis across regions of the developing world

This book presents a comparative analysis of the policy responses of developing countries in Africa, Asia and Latin America and the Caribbean to the challenges that greater external financial openness and price and exchange-rate flexibility pose to economic stability. Greater external openness has significantly narrowed developing economies’ policy space, while at the same time increasing the potential for financial fragility and instability. These challenges, which have come to the fore since the global financial crisis of 2008–2009, are also manifest in the profound impact of the COVID-19 pandemic and will shape the post-pandemic recovery. The book examines how different countries have used capital controls and macroprudential tools and highlights key lessons learned.Presentation .-- Introduction .-- Chapter I. Capital flow regulation: selected experiences in developing countries from Latin America, Africa and Asia-Pacific and analysis of the type of capital controls needed to confront the disruptive effects of the COVID-19 / Esteban Pérez Caldentey, Zebulun Kreiter, Martín Abeles .-- Chapter II. Challenges posed by the Global Development trajectory from 2022 to 2030 / Terry McKinley .-- Chapter III. A critical assessment of macroprudential regulation and comparative regional experiences focusing on Latin America and the Caribbean / Esteban Pérez Caldentey, Lorenzo Nalin, Leonardo Rojas .-- Chapter V. Macroprudential policies in Asia: A consideration of some Asian experiences / Jayati Ghosh .-- Chapter VI. Macroprudential policies in Latin America / Pablo Gabriel Bortz .-- Chapter VII. A Framework to Interpret Macroprudential Policies in an Era of Financialization / Matías Vernengo .-- Chapter VIII. A baseline stock-flow model for the analysis of macroprudential regulation guidelines and policies for Latin America and the Caribbean / Esteban Perez Caldentey, Lorenzo Nalin, Leonardo Rojas .-- Chapter IX. Finance-led premature de-industrialization and the role of external macroprudential policy for post-COVID-19 transformative development: Latin America in a comparative perspective / Alberto Botta, Giuliano Yajima, Gabriel Porcile .-- Chapter X. Conclusions / Esteban Pérez Caldentey, Juan Carlos Moreno-Brid, Lorenzo Nalín

Structural change and counter-reforms in Latin America: Necessity or possibility?

The issue that we present today was conceived in a very different economic, politicaland social context from the one that currently prevails due to the emergenceof a unique historical event: The Coronavirus pandemic. A phenomenon that willhave effects on economic growth and unemployment similar to those of the GreatDepression of the 1930s and an impact on human lives similar to those of a war.An economic crisis and a humanitarian crisis come together in this event.One of the central questions posed by this phenomenon is whether it will accentuatethe prevailing trends in the form of organization and articulation of productionon a world scale and global finance, or whether, by contrast, it will be a disruptivefactor and one of creative destruction. Whatever the result, the pandemic willaffect the productive structure of Latin America and the possibilities of the regionto move towards a progressive structural change.Fil: Chena, Pablo Ignacio. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Conicet - La Plata. Instituto de Investigaciones en Humanidades y Ciencias Sociales. Universidad Nacional de La Plata. Facultad de Humanidades y Ciencias de la Educación. Instituto de Investigaciones en Humanidades y Ciencias Sociales; ArgentinaFil: Pérez Caldentey, Esteban. Comisión Económica para América Latina y el Caribe; Chil

Comparación de la dinámica e impactos de los choques financieros y de términos del intercambio en América Latina en el período 1980-2006

Incluye BibliografíaResumenEn el período 1960-2006, en los países de América Latina se observa un aumento de la frecuencia y la amplitud de los ciclos económicos. Entre 1960 y 1995 la región registró, en promedio, una aceleración (desaceleración); cada cuatro años, frecuencia que pasó a dos años a partir de 1995. Asimismo, la amplitud promedio de los ciclos del PIBprácticamente se duplicó a partir de 1995.La dinámica del ciclo económico ha estado históricamente ligada a las fluctuaciones de los términos del intercambio y los flujos financieros. La importancia relativa de aquellas ha variado con el tiempo: el coeficiente de correlación entre el ciclo del producto interno bruto regional y las fluctuaciones financieras aumentó significativamente en la década de 1990. Las fluctuaciones de los términos del intercambio tuvieron una importancia relativa mayor entre 1960 y 1980 y entre 2002-2006.Dada la importancia de las fluctuaciones de los términos del intercambio y de los flujos financieros en los ciclos económicos, el documento identifica y describe la dinámica de las fluctuaciones más extremas (es decir, los choques); de los términos del intercambio y los flujos financieros de América Latina en el período 1980-2006 evaluando su impacto sobre el crecimiento económico.Se identifican los choques de acuerdo con una metodología estadística que separa los componentes de tendencia y ciclo de la serie. Luego, sobre la base de la construcción de distribuciones de probabilidad empíricas y los respectivos intervalos de confianza, se definen los años de choques financieros y de términos del intercambio

A stock-flow approach to investment requirements within balance-of-payments constrained growth

According to the balance-of-payments constrained growth model, an expansion of aggregate domestic demand is effective in increasing the long-run rate of growth of an economy to the extent that the performance of the external sector validates it. While the performance of the domestic economy is intertwined with that of the external sector, the balance-of-payments constraint on growth does not make these relationships explicit. This document addresses this issue and proposes a framework to make explicit the investment requirements with balance-of-payments constrained growth. This is done in two steps. The document first develops a theoretical framework to explicitly bring to light the investment requirements consistent with the balance-of-payments constraint. Second, it proposes a stock-flow model comprising five sectors (households, firms, government, commercial banks, and the external sector) to analyse the relationships between the external sector and commercial banks and the performance of the domestic economy, including investment.Introduction .-- I. Growth, investment and exports .-- II. The balance-of-payments constraint and the internal conditions for equilibrium .-- III. Internal growth requirements consistent with the balance of payments constraint .-- IV. A stock-flow approach to investment requirements .-- V. A brief description of the behavior of the agents of the stock-flow model .-- VI. The logic and causality of the model and some simulation results

Estudios sobre financierización en América Latina

En los trabajos reunidos en este libro se analizan los efectos y la lógica de la financierización en las economías en desarrollo, la llamada financierización periférica, en particular en los países de América Latina. En los primeros capítulos del libro se ofrece una mirada histórica y conceptual del fenómeno, para luego concentrarse en algunas de sus manifestaciones más específicas, como su influencia en la dinámica de la inversión productiva, el gasto en investigación y desarrollo, las características de la inversión extranjera directa, la gestión de la política monetaria, y la composición y la dinámica del endeudamiento externo. La variedad de los aportes integrados en este volumen refleja una preocupación histórica de la Comisión Económica para América Latina y el Caribe (CEPAL): analizar de manera consistente las condiciones que hacen posible una macroeconomía para el desarrollo, una agenda de investigación que como sostiene Alicia Bárcena en el prólogo de este libro "no puede sino comenzar por una discusión más profunda sobre la dinámica y los efectos de la financierización".Fil: Abeles, Martín. Comisión Económica para América Latina y el Caribe (CEPAL), Chile.Fil: Pérez Caldentey, Esteban. Comisión Económica para América Latina y el Caribe (CEPAL), Chile.Fil: Valdecantos, Sebastián. Comisión Económica para América Latina y el Caribe (CEPAL), Chile

Un ensayo sobre los derechos especiales de giro (DEG) y su papel en la arquitectura financiera internacional

Este ensayo analiza el rol que cumplen los derechos especiales de giro (DEG) en la arquitectura financiera internacional, resaltando sus limitantes. El DEG fue la respuesta al principal problema que aquejó la economía internacional entre 1920 y 1971: la insuficiencia de liquidez en la economía mundial. Más de medio siglo después de su creación, no ha cumplido con sus dos fines principales: ser el principal activo de reserva en la economía global y ser un instrumento central para manejar el ciclo económico global.Resumen .-- Introducción .-- I. Consideraciones preliminares sobre los derechos especiales de giro (DEG) .-- II. El derecho especial de giro fue creado para enfrentar el principal problema de la economía internacional entre 1920 y 1970: la escadez de reservas internacionales .-- III. Los DEG tienen un escaso impacto en la liquidez internacional .-- IV. Los DEG enfrentan importantes limitantes institucionales y legales en su uso .-- V. A pesar de su reducida esfera de aplicación, los DEG han demostrado ser versátiles y flexibles en sus usos .-- VI. Conclusión: lineamientos para el futuro

Creative industries in the Caribbean: a new road for diversification and export growth

Includes bibliographyCreative industries have become a new engine of growth and development in the world economy. This dynamic sector, which ranges from traditional arts to multimedia, has been an important driver of innovation and productivity growth. The present study argues that the creative industries can become a pillar for economic diversification and export growth in the Caribbean. The study adds to the developing literature on the creative sector by evaluating export performance in the context of constraints as well as opportunities. The Caribbean creative sector possesses a number of advantages that are recommendation for development. The creative industries allow the leverage of the abundant talent and skill of Caribbean people and domestic capital to produce competitive products and services. In addition, the sector is comparatively labour intensive and can, therefore, help to alleviate the chronic unemployment problem in the Caribbean. Nevertheless, the study indicates that Caribbean countries have been underperforming in most segments of the creative industries, even when benchmarked against other developing countries of similar size and level of development. This is reflected in small and stagnant market shares, both in regional and international trade, in most segments of the sector. Weak trade performance is determined by a number of binding constraints faced by the creative industries