A Monetary and Fiscal History of Latin America, 1960-2017

2021

Timothy J. Kehoe and Juan Pablo Nicolini, Editors
Foreword by François R. Velde

A major, new, and comprehensive look at six decades of macroeconomic policies across the region

This major new work brings together dozens of leading economists to explore the economic performance of the ten largest countries in South America and of Mexico. Cowritten with Nobel Prize winner Thomas J. Sargent, the editors’ introduction provides a conceptual framework for analyzing fiscal and monetary policy in countries around the world, particularly those less developed.

What went wrong with the economic development of Latin America over the past half-century? Along with periods of poor economic performance, the region’s countries have been plagued by a wide variety of economic crises. This major new work brings together dozens of leading economists to explore the economic performance of the ten largest countries in South America and of Mexico. Together they advance the fundamental hypothesis that, despite different manifestations, these crises all have been the result of poorly designed or poorly implemented fiscal and monetary policies.

Each country is treated in its own section of the book, with a lead chapter presenting a comprehensive database of the country’s fiscal, monetary, and economic data from 1960 to 2017. The chapters are drawn from one-day academic conferences—hosted in all but one case, in the focus country—with participants including noted economists and former leading policy makers. Cowritten with Nobel Prize winner Thomas J. Sargent, the editors’ introduction provides a conceptual framework for analyzing fiscal and monetary policy in countries around the world, particularly those less developed. A final chapter draws conclusions and suggests directions for further research.

A vital resource for advanced undergraduate and graduate students of economics and for economic researchers and policy makers, A Monetary and Fiscal History of Latin America, 1960–2017 goes further than any book in stressing both the singularities and the similarities of the economic histories of Latin America’s largest countries.

Contributors: Mark Aguiar, Princeton U; Fernando Alvarez, U of Chicago; Manuel Amador, U of Minnesota; Joao Ayres, Inter-American Development Bank; Saki Bigio, UCLA; Luigi Bocola, Stanford U; Francisco J. Buera, Washington U, St. Louis; Guillermo Calvo, Columbia U; Rodrigo Caputo, U of Santiago; Roberto Chang, Rutgers U; Carlos Javier Charotti, Central Bank of Paraguay; Simón Cueva, TNK Economics; Julián P. Díaz, Loyola U Chicago; Sebastian Edwards, UCLA; Carlos Esquivel, Rutgers U; Eduardo Fernández Arias, Peking U; Carlos Fernández Valdovinos (former Central Bank of Paraguay); Arturo José Galindo, Banco de la República, Colombia; Márcio Garcia, PUC-Rio; Felipe González Soley, U of Southampton; Diogo Guillen, PUC-Rio; Lars Peter Hansen, U of Chicago; Patrick Kehoe, Stanford U; Carlos Gustavo Machicado Salas, Bolivian Catholic U; Joaquín Marandino, U Torcuato Di Tella; Alberto Martin, U Pompeu Fabra; Cesar Martinelli, George Mason U; Felipe Meza, Instituto Tecnológico Autónomo de México; Pablo Andrés Neumeyer, U Torcuato Di Tella; Gabriel Oddone, U de la República; Daniel Osorio, Banco de la República; José Peres Cajías, U of Barcelona; David Perez-Reyna, U de los Andes; Fabrizio Perri, Minneapolis Fed; Andrew Powell, Inter-American Development Bank; Diego Restuccia, U of Toronto; Diego Saravia, U de los Andes; Thomas J. Sargent, New York U; José A. Scheinkman, Columbia U; Teresa Ter-Minassian (formerly IMF); Marco Vega, Pontificia U Católica del Perú; Carlos Végh, Johns Hopkins U; François R. Velde, Chicago Fed; Alejandro Werner, IMF.

Timothy Kehoe is professor of economics at the University of Minnesota and adviser to the Federal Reserve Bank of Minneapolis. He was formerly adviser to the Mexican government in joining the North American Free Trade Agreement. His books include Great Depressions of the Twentieth Century.

Juan Pablo Nicolini is a senior research economist with the Federal Reserve Bank of Minneapolis. He has taught at the Instituto Tecnológico Autónomo de México in Mexico City and the Universidad Torcuato Di Tella in Buenos Aires, where he still holds a part-time position.

François R. Velde is a senior economist and research advisor in the economic research department at the Federal Reserve Bank of Chicago. He is the co-author, with Thomas Sargent, of The Big Problem of Small Change.

Contents

Foreword

François R. Velde

Acknowledgments

Detecting Fiscal-Monetary Causes of Inflation

Fernando Alvarez, Lars Peter Hansen, and Thomas Sargent

A Framework for Studying the Monetary and Fiscal History of Latin America

Timothy J. Kehoe, Juan Pablo Nicolini, and Thomas Sargent

The Case of Argentina

Francisco J. Buera and Juan Pablo Nicolini

Discussion of the Case of Argentina

Guillermo Calvo

Discussion of the Case of Argentina

Andrew Powell

The Case of Bolivia

Timothy J. Kehoe, Carlos Gustavo Machicado Salas, and José Peres Cajías

Discussion of the Case of Bolivia

Manuel Amador

The Case of Brazil

Márcio Garcia, Joao Ayres, Diogo Guillen, and Patrick Kehoe

Discussion of the Case of Brazil

José A. Scheinkman

Discussion of the Case of Brazil

Teresa Ter-Minassian

The Case of Chile

Rodrigo Caputo and Diego Saravia

Discussion of the Case of Chile

Sebastian Edwards

The Case of Colombia

David Perez-Reyna and Daniel Osorio

Discussion of the Case of Colombia

Arturo José Galindo

The Case of Ecuador

Simón Cueva and Julián P. Díaz

Discussion of the Case of Ecuador

Alberto Martin

The Case of Mexico

Felipe Meza

Discussion of the Case of Mexico

Alejandro Werner

The Case of Paraguay

Carlos Javier Charotti, Carlos Fernández Valdovinos, and Felipe González Soley

Discussion of the Case of Paraguay

Roberto Chang

Discussion of the Case of Paraguay

Pablo Andrés Neumeyer

The Case of Peru

César Martinelli and Marco Vega

Discussion of the Case of Peru

Mark Aguiar

Discussion of the Case of Peru

Saki Bigio

The Case of Uruguay

Gabriel Oddone and Joaquín Marandino

Discussion of the Case of Uruguay

Eduardo Fernández Arias

Discussion of the Case of Uruguay

Carlos Végh

The Case of Venezuela

Diego Restuccia

Discussion of the Case of Venezuela

Luigi Bocola

Discussion of the Case of Venezuela

Fabrizio Perri

Lessons from the Monetary and Fiscal History of Latin America

Carlos Esquivel, Timothy J. Kehoe, and Juan Pablo Nicolini

Contributors

Index