Economic rebounds in U.S. and euro zone: deceivingly similar, strikingly different
The global downturn following Lehman Brothers? failure in September 2008 has become known as the Great Recession for good reason: It was the most severe global economic contraction since the Great Depression. As the dust settles, patterns among key macroeconomic variables have emerged. Identifying them may make it possible to understand the nature of the downturn and, thus, determine which policies might best address its fallout.
Argentina's lost decade
Argentina suffered a depression in the 1980s that was as severe as the Great Depression experienced in the United States and Germany in the interwar period. Our paper examines this depression from the perspective of growth theory, taking total factor productivity as exogenous. The predictions of the growth model conform rather well with the observations during the lost decade years. ; Economic Research Working Paper 0107
Argentina's lost decade and subsequent recovery: hits and misses of the neoclassical growth model
We examine the economic depression that Argentina suffered in the 1980s, as well as the subsequent recovery, from the perspective of growth theory, taking total factor productivity as exogenous. The predictions of the neoclassical growth model conform rather well with the evidence for the "lost decade" depression and at the same time point to a puzzle: Investment did not recover in the subsequent decade of the 1990s nearly as fast as it should have according to that same model.
Argentina, Mexico, and currency boards: another case of rules versus discretion
This article discusses currency boards in light of the recent economic experiences of Mexico and Argentina. Carlos Zarazaga argues that currency boards do not solve the important time inconsistency problem pointed out in the rules-versus-discretion literature. Because of this failure, even the quasi-currency board established by law (the so-called convertibility law) did not protect Argentina from one of its most severe financial crises in modern times. ; In addition, there is the normative issue of whether an ironclad rule such as a currency board rule is superior to a noncontingent one. ...
Banking and finance in Argentina in the period 1900-35
From 1900 to 1935, Argentina evolved from an economy highly dependent on external, primarily British, finance to one more nearly self-sufficient. The authors examine the failure of domestic finance to adequately fill the void left by the decline of London and the breakdown of the world financial system in the interwar period, when neither the Buenos Aires Bolsa nor the private domestic banks developed rapidly enough to fully replace British investors as efficient channels for financing private investment. One consequence is that Argentine investable funds were increasingly concentrated in a ...
Measuring the benefits of unilateral trade liberalization, Part I: static models
Multilateral trade agreements generally require protracted and complicated negotiations. An obvious alternative is unilateral trade liberalization. However, would this simpler route toward free trade improve a country's welfare? This article, the first in a series of two, addresses this question using applied static models of international trade. The second article will examine the issue from the perspective of dynamic models. In the current article, Carlos Zarazaga discusses why static models fail to produce a clear-cut case in favor of unilateral trade liberalization. He points out, ...
Labor Market Not Overly Tight, Demographically Adjusted Measure Shows
Elevated inflation traditionally accompanies prolonged low unemployment rates, such as those currently observed in the U.S. However, price pressures have remained comparatively restrained, prompting further examination. The labor input utilization rate? the proportion of total hours individuals devote to work?provides insight when demographically adjusted, particularly when accounting for aging baby boomers. The indicator suggests the labor market wasn?t overly tight in second half 2018.