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Macroeconomics-for-Growth under Financial Globalization: Four Strategic Issues for Emerging Economies

  • Ricardo Ffrench-Davis
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Abstract

Latin America has exhibited contrasting features in its economic performance in the last decade and a half of market-based reforms. There has been good progress in achieving low inflation, improved fiscal balances, and high export growth. However, in parallel, low average GDP growth, low productive investment, and high volatility of economic activity associated with changes in capital flows are outstanding features of the performance of Latin American economies (LACs) since the early 1990s. Here we examine their relation to the sort of macroeconomic policies that were implemented. Success in achieving low inflation and moderate fiscal balances has not been accompanied by an effective demand close to potential GDP nor by interest and exchange rates providing sustain-able signals for efficient resource allocation. The macroeconomic environment, in general, has been providing an unfriendly framework and wrong macro-prices for productive development.

Keywords

Exchange Rate Aggregate Demand Macroeconomic Policy Capital Account Domestic Saving 
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© Economic Commission for Latin America and the Caribbean 2006

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  • Ricardo Ffrench-Davis

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