International Finance Discussion Papers (IFDP)
May 1989
External Debt and Developing Country Growth
Steven B. Kamin, Robert B. Kahn, and Ross Levine
Abstract:
This paper examines the question of how the path of real GDP in four important Latin American countries, Argentina, Brazil, Chile and Mexico, might have differed if the sharp run-up in borrowing during the late 1970s and early 1980s had not occurred. Specifically, we ask whether these countries are better off or worse off for having borrowed heavily prior to the debt crisis, and we attempt to gauge the extent to which they would have received greater benefits if policies that improve economic efficiency had been followed. A simple macroeconomic mode is developed, and the simulation results are compared to the historical outcomes.
PDF: Full Paper
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