Growth Recoveries (from Collapses)

Produced by: 
Inter-American Development Bank
Available from: 
July 2021
Paper author(s): 
Juan Francisco Meneses
Jose Luis Saboin
Macroeconomics - Economic growth - Monetary Policy

This paper analyzes the behavior of a long list of economic variables during episodes of recovery from an economic collapse.  A set of stylized facts is proposed so as to de- pict  what  in  this  work  is  called  “growth  recoveries”.   Through  different  estimation techniques, it is inferred under which conditions and policies the likelihood of experi- encing a growth recovery increases.  The results of the paper indicate that collapses tend  to  occur  in  countries  with  high  dependence  on  natural  resource  rents,  macroe- conomic mismanagement, low levels of democratic accountability and rule of law and high  levels  of  conflict.   Recoveries,  on  the  other  hand,  tend  to  be  longer  than  col- lapses and are more likely to occur in contexts of:  improved external conditions, less natural resource rents, balanced fiscal accounts, where the exchange rate corrects but within a more fixed exchange rate regime and a more restricted financial account, and where there are:  rebounds in private consumption, increases in international trade and improvements on property rights. 


Research section: 
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