Stabilization and the Rate of Capital Formation in Latin America, 1983-90: An Empirical Assessment

Miguel Ramirez

Eastern Economic Journal, 1995, vol. 21, issue 4, 523-538

Abstract: This paper attempts to go beyond the usual "stylized facts" reported by critics of IMF-sponsored stabilization programs implemented in Latin America over the past ten years. Its econometric evidence suggests that repeated devaluations of thee domestic currency, indiscriminate cuts in government spending, particularly capital expenditures, and huge net transfers of resources out of the region have all had a statistically negative impact on private capital formation. The results give further credence to arguments for discontinuing the forceful and simultaneous application of conventional adjustment measures, because they lead, more often than not, to chronic stagflation.

Keywords: Capital Expenditure; Capital; Stabilization (search for similar items in EconPapers)
JEL-codes: E22 E63 (search for similar items in EconPapers)
Date: 1995
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Persistent link: https://EconPapers.repec.org/RePEc:eej:eeconj:v:21:y:1995:i:4:p:523-538

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