TY  - JOUR
AU  - Bergoeing,Raphael
AU  - Kehoe,Patrick J.
AU  - Kehoe,Timothy J.
AU  - Soto,Raimundo
TI  - A Decade Lost and Found: Mexico and Chile in the 1980s
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8520
PY  - 2001
Y2  - October 2001
UR  - http://www.nber.org/papers/w8520
L1  - http://www.nber.org/papers/w8520.pdf
N1  - Author contact info:
Raphael Bergoeing
Diagonal Paraguay 257 - of. 1505
Santiago
CHILE
E-Mail: rbergoeing@fen.uchile.cl

Patrick Kehoe
Research Department
Federal Reserve Bank of Minneapolis
90 Hennepin Avenue
Minneapolis, MN  55480-0291
Tel: 612/204-5525
Fax: 612/204-5515
E-Mail: pkehoe@res.mpls.frb.fed.us

Timothy J. Kehoe
University of Minnesota
Department of Economics
1925 Fourth Street South
Minneapolis, MN 55455-0462
Tel: 612/625-1589
Fax: 612/204-5515
E-Mail: tkehoe@umn.edu
AB  - Chile and Mexico experienced severe economic crises in the early 1980s. This paper analyzes four possible explanations for why Chile recovered much faster than did Mexico. Comparing data from the two countries allows us to rule out a monetarist explanation, an explanation based on falls in real wages and real exchange rates, and a debt overhang explanation. Using growth accounting, a calibrated growth model, and economic theory, we conclude that the crucial difference between the two countries was the earlier policy reforms in Chile that generated faster productivity growth. The most crucial of these reforms were in banking and bankruptcy procedures.
ER  -