IMF Working Papers

Capital Inflows to Latin America: The 1970's and the 1990's

Author/Editor:

Carmen Reinhart ; Guillermo Calvo ; Leonardo Leiderman

Publication Date:

October 1, 1992

Summary:

During the past two years Latin America has received sizable international capital inflows. This paper compares the recent experience with that of the late 1970s. The analysis examines differences and similarities between the two episodes in three broad areas: domestic macroeconomic conditions in the recipient countries at the outset of both episodes, the behavior of the external factors that influence the international allocation of capital, and the response of key macroeconomic variables, such as the real exchange rate, reserves, and stock prices. The paper aims at assessing how vulnerable these economies are to an unexpected and swift reversal in capital inflows, and whether there are signs that the vulnerability has changed appreciably over time.

Series:

Working Paper No. 1992/085

Subject:

Balance of payments Capital inflows Exports External debt Financial markets Foreign exchange International trade Real exchange rates Stock markets

Notes:

Paper presented at the Tenth World Congress of the International Economic Association held in Moscow in August 1992.