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On the determinants and resilience of bond flows to LDCs, 1990-1995: evidence from Argentina, Brazil and Mexico
Bond flows to Less Developed Countries (LDCs) proved more resilient than expected to the rising U.S. interest rates during 1994, raising hopes that the current episode of private capital flows to LDCs may not end in a widespread crisis as its predecessors in the 1920s and 1970s did. This paper attributes the surprising resilience of the flows to the fact that global bond issuance was a significant determinant of them, independently of U.S. (and world) interest rates. Briefly, global issuance, which recovered quickly from the shock of the first interest-rate rise in February 1994, helped ...
Journal Article
Argentina Agonistes
Working Paper
Forecasting Brazilian output in the presence of breaks: a comparison of linear and nonlinear models
This paper compares the forecasting performance of linear and nonlinear models under the presence of structural breaks for the Brazilian real GDP growth. The Markov-switching models proposed by Hamilton (1989) and its generalized version proposed by Lam (1991) are applied to quarterly GDP from 1975:1 to 2000:2 allowing for breaks at the Collor Plans. The probabilities of recessions are used to analyze the Brazilian business cycle. The ability of each model in forecasting out-of-sample the growth rates of GDP is examined. The forecasting ability of the two models is also compared with linear ...
Working Paper
Are Long-Term Inflation Expectations Well Anchored in Brazil, Chile and Mexico?
In this paper, we consider whether long-term inflation expectations have become better anchored in Brazil, Chile, and Mexico. We do so using survey-based measures as well as financial market-based measures of long-term inflation expectations, where we construct the market-based measures from daily prices on nominal and inflation-linked bonds. This paper is the first to examine the evidence from Brazil and Mexico, making use of the fact that markets for longterm government debt have become better developed over the past decade. We find that inflation expectations have become much better ...
Journal Article
The impact of the Brazilian crisis in the Tenth District
The recent economic turmoil in Brazil, triggered by the devaluation in January of the "real" (Brazil's currency), has understandably created concern about how the United States will be affected. This article looks at the possible impacts in the Tenth District and finds that, at least for now, there is little need for concern. The article is divided into three sections: an explanation of the crisis and its overall potential for harm, a brief discussion of the direct impact on district producers, and a more thorough analysis of the indirect ways a spread of the crisis could affect ...
Working Paper
Is foreign-currency indexed debt a commitment technology? Some evidence from Brazil and Mexico
We examine the effects of foreign currency-indexed debt upon inflationary expectations in Brazil and Mexico. Conjecturing that markets will view increasing overhangs of foreign currency-indexed debt as a commitment technology that fiscally punishes devaluation, we test whether increasing such overhangs will attenuate the effect of monetary growth upon inflationary expectations. We find some econometric confirmation of these conjectures in both the Brazilian and Mexican cases. Finding that the results are consistent with the notion that increasing the share of dollar indexed debt may also ...