Good-Bye financial crash, hello financial eclecticism: Latin American responses to the 2008–09 global financial crisis

Manuel Pastor and Carol Wise

Journal of International Money and Finance, 2015, vol. 52, issue C, 200-217

Abstract: 1985 saw the publication of Carlos Díaz-Alejandro's classic article, “Good-Bye Financial Repression, Hello Financial Crash” (1985). Writing in the wake of drastic financial blowups in the Southern Cone, Díaz-Alejandro nonetheless argued that “a believable alternative system could be designed, avoiding many of the inefficiencies of financial repression … and blending both public and private financial agents” (18). Nearly three decades after the publication of this prescient work, there are credible signs that such an arrangement is now emerging within some Latin American emerging economies (EEs). Just as Díaz-Alejandro studied how the 1982 debt shocks both exacerbated and shed light on financial sector policies and institutions in the Southern Cone countries, we use the 2008–09 global financial crisis (GFC) as a lens through which to examine the policymaking capabilities of six Latin American countries. We find that several of the countries successfully weathered the 2008–09 financial shocks and argue that this is due to: institutional modernization that facilitated policy learning and a more business-friendly climate; and, to sustainable improvements in income distribution that may have facilitated consensus-building. These factors, we suggest, gave policymakers both the expertise and the political space to employ more nuanced fiscal and financial policies.

Keywords: Latin America; Global financial crisis; Capital mobility; Macro-prudential policy; Counter-cyclical policy; Institutional reform (search for similar items in EconPapers)
JEL-codes: E52 E65 F59 O11 O23 O54 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0261560614002125
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:52:y:2015:i:c:p:200-217

DOI: 10.1016/j.jimonfin.2014.11.019

Access Statistics for this article

Journal of International Money and Finance is currently edited by J. R. Lothian

More articles in Journal of International Money and Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().