Working Paper
Does the choice of nominal anchor matter?
Gould, David M. (1999)
The conventional wisdom on nominal anchors is that exchange rate-based inflation stabilizations lead to economic booms while monetary-based stabilizations lead to recessions. This study finds strong evidence against this view. Rather than determining the path of economic growth, the choice of nominal anchor appears to be endogenously determined by the state of the economy. To peg or manage the exchange rate, a high level of international reserves is important, especially when a government's credibility is low after a period of high inflation. After controlling for the level of ...
Center for Latin America Working Papers , Paper 0499

Working Paper
Dollarization and monetary unions: implementation guidelines
Wynne, Mark A.; Zarazaga, Carlos E.; Gruben, William C. (2001)
Economic Research Working Paper 0105
Center for Latin America Working Papers , Paper 0201

Working Paper
Financial liberalization, market discipline and bank risk
Koo, Jahyeong; Moore, Robert R.; Gruben, William C. (2003)
In the literature on systemic banking crises, two common themes are: (1) Risky lending often follows bank liberalization. (2) Lack of market discipline encourages risky lending. That not all liberalizations are followed by financial crisis and that financial systems without market discipline sometimes operate without incident invites examination of these themes. In a test of six countries, we find that our measure of bank risk increases significantly in the wake of financial liberalizations, but only where depositors fail to discipline banks. Our measures of market discipline and bank risk, ...
Center for Latin America Working Papers , Paper 0303

Working Paper
Is tighter fiscal policy expansionary under fiscal dominance? Hypercrowding out in Latin America
Gruben, William C.; Welch, John H. (2005)
We test for hypercrowding out as a signal of market concerns over fiscal dominance in five Latin American countries. Hypercrowding out occurs when fiscally dominated governments domestic credit demands are perceived as so intrusive to a nations financial system that a move towards fiscal surplus lowers interest rates and increases growth. We sample five Latin American countries to test for these relationships. Judged by the results of vector error correction models, three nations test clearly positive, suggesting market concern despite their recent efforts towards fiscal balance.
Center for Latin America Working Papers , Paper 0205

Working Paper
Choosing among rival poverty rates : some tests for Latin America
McLeod, Darryl; Gruben, William C. (2003)
Poverty rates are now widely available, but are they reliable? Wide variations in estimated poverty rates for the same poverty line, year and country reflect an underlying reality: there is no widely accepted procedure for estimating national poverty rates. This paper proposes a simple, ex post procedure for selecting poverty rates that have certain desirable properties. Absolute poverty measures, estimated uniformly across countries, should be correlated with nonmonetary indicators that reflect the consequences of physical deprivation (e.g., malnutrition, birth rates, school attendance). A ...
Center for Latin America Working Papers , Paper 0103

Working Paper
Argentina's capital gap puzzle
Kydland, Finn E.; Zarazaga, Carlos E. (2004)
Argentinas GDP per working age person in 2003 was about the same as it was twenty years earlier and around fifteen percent below trend. By international standards that has been a dismal performance whose ultimate sources are important to uncover to eventually reverse that countrys seemingly secular decline. The purpose of this paper is precisely to take a first step towards that understanding. To that effect, we examine Argentinas recent growth experience, which includes two deep recessions and a recovery, with the lens of a neoclassical growth model that takes total factor productivity as ...
Center for Latin America Working Papers , Paper 0504

Working Paper
Argentina's recovery and "excess" capital shallowing of the 1990s
Kydland, Finn E.; Zarazaga, Carlos E. (2002)
The paper examines Argentinas economic expansion in the 1990s through the lens of a parsimonious neoclassical growth model. The main finding is that investment remained considerably weaker than what the model would have predicted. The resulting excessive capital shallowing could be identified as a weakness of the rapid economic growth of the 1990s that may have played a role in Argentinas ultimate inability to escape the crisis that started to unfold towards the end of that decade. ; Economic Research Working Paper 0204
Center for Latin America Working Papers , Paper 0102

Working Paper
Why do financial systems differ? History matters
Quintin, Erwan; Monnet, Cyril (2004)
We describe a dynamic model of financial intermediation in which fundamental characteristics of the economy imply a unique equilibrium path of bank and financial market lending. Yet we also show that economies whose fundamental characteristics have converged may continue to have very different financial structures. Because setting up financial markets is costly in our model, economies that emphasize financial market lending are more likely to continue doing so in the future, all else equal.
Center for Latin America Working Papers , Paper 0304

Working Paper
Privatization, competition, and supercompetition in the Mexican commercial banking system
Gruben, William C.; McComb, Robert P. (1999)
Economic Research Working Paper 9904
Center for Latin America Working Papers , Paper 0199

Working Paper
When does financial liberalization make banks risky? : an empirical examination of Argentina, Canada and Mexico
Koo, Jahyeong; Moore, Robert R.; Gruben, William C. (1999)
In the literature on systemic banking crises, two common themes are: (1) lack of market discipline encourages risky lending and (2) financial liberalization or privatization lead to risky lending. However, there is evidence to suggest that neither financial liberalization nor weak market discipline always precedes risky lending. We test for depositor discipline and, separately for post-liberalization or post-privatization risky lending in Argentina, Canada, and Mexico. In the countries without market discipline, lending risk increases significantly in the wake of liberalization. Where ...
Center for Latin America Working Papers , Paper 0399