The Growth-Interest Rate Cycle in the United States and its Consequences for Emerging Markets

Carmen Reinhart, Guillermo Calvo, Eduardo Fernandez-Arias and Ernesto Talvi

No 4279, Research Department Publications from Inter-American Development Bank, Research Department

Abstract: At the time of writing there were widespread concerns about the health of the U. S. economy. There is conclusive evidence that the pace of growth has slowed, which has prompted the Federal Reserve to cut interest rates on two occasions (a total of 100 basis points thus far). As usual, when faced with this kind of turning point, analysts and policy makers alike wonder whether the United States will achieve a "soft landing" or whether the downturn is more serious and protracted in the worst scenario, the new weakness could signal the end of the new economy. Furthermore, recent inflation surprises have not been encouraging, as higher-than expected inflation numbers may curtail the Federal Reserve`s desire and ability to act counter cyclically.

Date: 2001-03
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Related works:
Working Paper: The Growth-Interest Rate Cycle in the United States and its Consequences for Emerging Markets (2001)
Working Paper: El ciclo de crecimiento de la tasa de interés en Estados Unidos y sus consecuencias para los mercados emergentes (2001)
Working Paper: The Growth-Interest Rate Cycle in the United States and its Consequences for Emerging Markets (2001)
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