Policy-Driven Productivity in Chile and Mexico in the 1980s and 1990s

Raphael Bergoeing (), Patrick J. Kehoe (), Timothy J. Kehoe () and Raimundo Soto ()

No 125, Documentos de Trabajo from Centro de Economía Aplicada, Universidad de Chile

Abstract: Both Chile and Mexico experienced severe economic crises in the early 1980s, but Chile recovered much faster than did Mexico. Using growth accounting and a calibrated dynamic general equilibrium model, we conclude that the crucial determinant of this difference between the two countries was the faster productivity growth in Chile, rather than higher investment or employment. Our hypothesis is that this difference in productivity was driven by ealier policy reforms in Chile, the most crucial of which were in banking and bankruptcy procedures. We propose a theoretical framework in which government policy affects both the allocation of resources and the composition of firms.

Date: 2002
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Related works:
Working Paper: Policy-driven productivity in Chile and Mexico in the 1980s and 1990s (2002)
Working Paper: Policy-Driven Productivity in Chile and Mexico in the 1980s and 1990s (2002)
Journal Article: Policy-Driven Productivity in Chile and Mexico in the 1980's and 1990's (2002)
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Persistent link: http://EconPapers.repec.org/RePEc:edj:ceauch:125

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