nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2005‒02‒27
two papers chosen by
Karl Petrick
Leeds Metropolitan University

  1. Cultural Attitudes and Economic Development: arguments for a pluralist political economy of development By Manuel Couret Branco
  2. Financial Liberalization in Latin-America in the 1990s: A Reassessment By Joshua Aizenman

  1. By: Manuel Couret Branco (Department of Economics, University of Évora)
    Date: 2005
  2. By: Joshua Aizenman
    Abstract: This paper studies the experience of Latin-America [LATAM] with financial liberalization in the 1990s. The rush towards financial liberalizations in the early 1990s was associated with expectations that external financing would alleviate the scarcity of saving in LATAM, thereby increasing investment and growth. Yet, the data and several case studies suggest that the gains from external financing are overrated. The bottleneck inhibiting economic growth is less the scarcity of saving, and more the scarcity of good governance. A possible interpretation for these findings is that in countries where private savings and investments were taxed in an arbitrary and unpredictable way, the credibility of a new regime could not be assumed or imposed. Instead, credibility must be acquired as an outcome of a learning process. Consequently, increasing the saving and investment rates tends to be a time consuming process. This also suggests that greater political instability and polarization would induce consumers to be more cautious in increasing their saving and investment rates following a reform. Hence, reaching a sustained take-off in Latin-America is a harder task to accomplish than in Asia.
    JEL: F21 F23 F36 F43
    Date: 2005–02

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