The Monetary and Fiscal History of Bolivia, 1960–2017
After the economic reforms that followed the National Revolution of the 1950s, Bolivia seemed positioned for sustained growth. Indeed, it achieved unprecedented growth from 1960 to 1977. The rapid accumulation of debt due to persistent deficits and a fixed exchange rate policy during the 1970s led to a debt crisis that began in 1977. From 1977 to 1986, Bolivia lost almost all the gains in GDP per capita that it had achieved since 1960. In 1986, Bolivia started to grow again, interrupted only by the financial crisis of 1998–2002, which was the result of a drop in the availability of external financing. Bolivia has grown since 2002, but government policies since 2006 are reminiscent of the policies of the 1970s that led to the debt crisis, in particular, the accumulation of external debt and the drop in international reserves due to a de facto fixed exchange rate since 2012.
This paper was written as part of the Monetary and Fiscal History of Latin America project sponsored by the Becker Friedman Institute at the University of Chicago and the Heller-Hurwicz Economics Institute at the University of Minnesota. We thank participants at the following conferences for helpful suggestions: “The Monetary and Fiscal History of Latin-America, 1960–2010” at the Federal Reserve Bank of Minneapolis, especially Kjetil Storesletten; “La Historia Monetaria y Fiscal de Bolivia: 1960–2014” at the Universidad Católica Boliviana “San Pablo”; “The Monetary and Fiscal History of Latin-America: A Comparative Case Study Using a Common Approach” at the University of Chicago, especially Fernando Alvarez; and “The Monetary and Fiscal History of Latin-America Conference at the University of Chicago, especially Manuel Amador and Simon Cueva. The views expressed herein are those of the authors and not necessarily those of the Federal Reserve Bank of Minneapolis or the Federal Reserve System. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.