Did the debt crisis cause the investment crisis?

Andrew Warner

No 418, International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)

Abstract: There is now a large literature which attributes the investment decline in heavily indebted developing countries to the effects of the international debt crisis which began in 1982. However, these theories have not been tested against the alternative that declining terms of trade and high world real interest rates in the early 1980s directly caused the investment declines. This paper is based on the idea that if the debt theories are true, then forecasts of investment in the 1980s which do not use debt variables should not perform very well. This paper points out that such forecasts perform surprisingly well, and in many cases go against the predictions of the debt theories, casting doubt on the validity of the debt theories.

Keywords: Debt; Developing countries; Financial crises (search for similar items in EconPapers)
Date: 1991
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.federalreserve.gov/pubs/ifdp/1991/418/default.htm (text/html)
http://www.federalreserve.gov/pubs/ifdp/1991/418/ifdp418.pdf (application/pdf)

Related works:
Journal Article: Did the Debt Crisis Cause the Investment Crisis? (1992)
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:fip:fedgif:418

Access Statistics for this paper

More papers in International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.) Contact information at EDIRC.
Bibliographic data for series maintained by Ryan Wolfslayer ; Keisha Fournillier ().