Unit 1: the State, Policy-Making and Political Economy

Total Page:16

File Type:pdf, Size:1020Kb

Unit 1: the State, Policy-Making and Political Economy Unit One: The State, Policy-Making and Political Economy Unit Information 2 Unit Overview 2 Unit Aims 2 Unit Learning Outcomes 2 Unit Interdependencies 2 Key Readings 3 Further Readings 4 References 5 1.0 State roles and state ‘failure’ 7 Section Overview 7 Section Learning Outcomes 7 1.1 State failures and market failures 7 1.2 Sources of state failure 9 1.3 Douglass North on state failure 11 1.4 State activities 12 Section 1 Self Assessment Questions 17 2.0 Introducing political economy 18 Section Overview 18 Section Learning Outcomes 18 2.1 Defining characteristics of political economy analysis 18 2.2 A generic political economy model 21 Section 2 Self Assessment Questions 26 3.0 Policy processes 27 Section Overview 27 Section Learning Outcomes 27 3.1 The traditional model of the policy process 27 3.2 Evidence versus interest in policy-making 29 Section 3 Self Assessment Questions 33 Unit Summary 34 Unit Self Assessment Questions 35 Key Terms and Concepts 36 P527 Political Economy of Public Policy Unit 1 UNIT INFORMATION Unit Overview Many policy analysts, researchers, entrepreneurs, development practitioners and citizens get frustrated by what they see as the failure of the state or its agencies to do what they think it should do. The two main areas in which states are seen to fail are policy design and service delivery. In this unit we review how influential schools of economic thought see the role of the state and explore reasons for so-called state failure. We then introduce basic elements of political economy analysis, which examines the interaction of political and economic processes within a society and can shed some light on why states actually act as they do (and why they formulate the policies that they do). The unit concludes with a consideration of how policies are actually formulated and reflects on the relative importance of vested interest versus evidence in policy design. Unit Aims • To review how influential schools of economic thought see the role of the state and explore reasons for so-called state failure. • To present the concept of rents. • To introduce a generic political economy model for analysing the selection of leaders and the formation of policy. • To consider the relative importance of vested interest versus evidence in policy design. Unit Learning Outcomes By the end of this unit, students should be able to: • compare alternative explanations as to why states often do not perform the roles that economists and other policy analysts would like them to • distinguish different types of rents and explain their potential contributions to economic growth and development • explain the basic objectives of political economy analysis • describe the main building blocks of a basic political economy model and explain the importance of each • assess critically the traditional model of the policy process • analyse the role of evidence in shaping policy Unit Interdependencies The explanation of different types of rents is valuable for the whole module, but will be returned to in greatest detail in Unit 8. © SOAS CeDEP 2 P527 Political Economy of Public Policy Unit 1 KEY READINGS Section 1 Bates R (1989) Beyond the Miracle of the Market: The Political Economy of Agrarian Development in Kenya. Cambridge University Press, Cambridge, pp. 6– 9. This short section from the introduction of Bates’ 1989 book simply and powerfully illustrates the importance of the allocation of property rights to the speed and direction of economic growth. It also underlines the point that the allocation of property rights within an economy is fundamentally a question of politics. The argument is made with reference to the work of Coase (1960), often held up as one of the foundational works of new institutional economics. Khan M (2000) Rents, efficiency and growth. In: Khan M, Jomo K (eds) Rents, Rent-Seeking and Economic Development: Theory and Evidence in Asia. Cambridge University Press, Cambridge, pp. 21–69. In this chapter, Khan sets out six types of rents that governments can bestow on firms, individuals and groups within an economy. These rents flow from the allocation of property rights. Khan’s theory is heterodox, drawing on neoclassical economics, new institutional economics and the works of Karl Marx. His central argument is that the wise distribution of some of these types of rents can spur economic growth — thus facilitating development even in apparently highly corrupt environments — whilst others act as a deadweight burden on the economy. The explanation of each type of rent should be readily accessible to all students of this module. Section 2 Drazen A (2008) Is there a different political economy for developing countries? Issues, perspectives and methodology. Journal of African Economies 17(AERC Supplement 1) i23–i31. The overall purpose of Drazen’s paper is to argue that the same general approach can be applied to the analysis of political economy issues in developed and developing countries. In the selected pages, Drazen outlines the key building blocks of a generic political economy model, which (he argues) can be applied to any context. The main elements of his model are political actors, their objectives and the mechanisms by which political decisions are made (ie institutions). As you read this excerpt, think how the ‘building blocks’ might apply within a country with which you are familiar. © SOAS CeDEP 3 P527 Political Economy of Public Policy Unit 1 FURTHER READINGS DFID (2009) Political Economy Analysis: How to Note. DFID Practice Paper, Department for International Development, London, July 2009. Available from: http://www.odi.org.uk/events/2009/07/23/1929-dfid-note-political- economy-analysis.pdf This paper illustrates the fact that aid donors are increasingly looking to political economy analysis to inform their country-level strategies and activities. The paper describes a number of practical approaches to political economy analysis at macro, sectoral and policy problem levels. IDS/KNOTS (2006) Understanding Policy Processes: A Review of IDS Research on the Environment. Institute of Development Studies (IDS), Brighton. Available from: http://r4d.dfid.gov.uk/pdf/ThematicSummaries/Understanding_Policy_Processes.pdf This paper distils some of the key insights from Keeley and Scoones (1999) and illustrates how they have been applied within research on policy-making related to environmental and natural resource management by researchers at the Institute of Development Studies. Relevant to Section 3 of this unit. World Bank (2008) The Political Economy of Policy Reform: Issues and Implications for Policy Dialogue and Development Operations. Report No 44288 GLB, Social Development Department, The World Bank, Washington DC, June 2008. Available from: http://siteresources.worldbank.org/EXTSOCIALDEV/Resources/The_Political_Economy _of_Policy_Reform_Issues_and_Implications_for_Policy_Dialogue_and_Development_ Operations.pdf Examines World Bank experience in promoting policy reform in agriculture and the water and sanitation sectors of developing countries from a political economy perspective. Reform is fairly narrowly conceived as pro-market action, but the insights as to who might support or propose reform and why, and how the reform process can be structured so as to gain support and reduce opposition, are useful. © SOAS CeDEP 4 P527 Political Economy of Public Policy Unit 1 REFERENCES Bardhan P (1996) Decentralised development. Indian Economic Review XXXI(2) 139–156. Bates R (1989) Beyond the Miracle of the Market: The Political Economy of Agrarian Development in Kenya. Cambridge University Press, Cambridge, pp. 6–8. Binswanger H, McIntire J (1987) Behavioural and material determinants of production relations in land-abundant tropical agriculture. Economic Development and Cultural Change 36(1) 75–99. Clay E, Schaffer B (eds) (1984) Room for Manoeuvre: An Exploration of Public Policy in Agriculture and Rural Development. Heinemann, London. Coase R (1960) The problem of social cost. Journal of Law and Economics 3(October) 1–44. Collinson S (ed) (2003) Power, Livelihoods and Conflict: Case Studies in Political Economy Analysis for Humanitarian Action. Humanitarian Policy Group Report No 13, Overseas Development Institute (ODI), London. Available from: http://www.odi.org.uk/resources/download/241.pdf [Accessed 1 December 2013] DFID (2009) Political Economy Analysis: How to Note. DFID Practice Paper, Department for International Development, London (DFID), July 2009. Drazen A (2008) Is there a different political economy for developing countries? Issues, perspectives and methodology. Journal of African Economies 17(AERC Supplement 1) 18–71. Grossman G, Helpman E (1995) Trade wars and trade talks. Journal of Political Economy 103(4) 675–708. Keeley J, Scoones I (1999) Understanding Environmental Policy Processes: A Review. IDS Working Paper No 89, Institute of Development Studies (IDS), Brighton. Khan M (2000) Rents, efficiency and growth. In: Khan M, Jomo K (eds) Rents, Rent- Seeking and Economic Development: Theory and Evidence in Asia. Cambridge University Press, Cambridge, pp. 21–69. Krueger A, Schiff M, Valdes A (1988) Agricultural incentives in developing countries – measuring the effect of sectoral and economy-wide policies. World Bank Economic Review 2(3) 255–272. © SOAS CeDEP 5 P527 Political Economy of Public Policy Unit 1 Kydd J (2009) A new institutional economic analysis of the state and agriculture in Sub-Saharan Africa. In: Kirsten J, Dorward A, Poulton C, Vink N (eds) Institutional Economics
Recommended publications
  • COVID-19 and Economic Policy Toward the New Normal: a Monetary-Fiscal Nexus After the Crisis?
    IN-DEPTH ANALYSIS Requested by the ECON committee Monetar y Dialogue Papers, November 2020 COVID-19 and Economic Policy Toward the New Normal: A Monetary-Fiscal Nexus after the Crisis? Policy Department for Economic, Scientific and Quality of Life Policies Directorate-General for Internal Policies Author: Thomas MARMEFELT EN PE 658.193 - November 2020 COVID-19 and Economic Policy Toward the New Normal: A Monetary-Fiscal Nexus after the Crisis? Monetary Dialogue Papers, November 2020 Abstract Current developments during the COVID-19 pandemic involve strongly complementary monetary and fiscal policy, but both as responses to COVID-19 and not the outcome of an emergent monetary-fiscal nexus. Therefore, the ECB maintains its independence by using unconventional monetary policy measures to reach price stability, according to its mandate. This document was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the Committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 19 November 2020. This document was requested by the European Parliament's committee on Economic and Monetary Affairs (ECON). AUTHOR Thomas MARMEFELT, CASE – Center for Social and Economic Research (Warsaw, Poland) and University of Södertörn (Huddinge, Sweden) ADMINISTRATOR RESPONSIBLE Drazen RAKIC EDITORIAL ASSISTANT Janetta CUJKOVA LINGUISTIC VERSIONS Original: EN ABOUT THE EDITOR Policy departments provide in-house and external expertise to support European Parliament committees
    [Show full text]
  • Uncertainty and Hyperinflation: European Inflation Dynamics After World War I
    FEDERAL RESERVE BANK OF SAN FRANCISCO WORKING PAPER SERIES Uncertainty and Hyperinflation: European Inflation Dynamics after World War I Jose A. Lopez Federal Reserve Bank of San Francisco Kris James Mitchener Santa Clara University CAGE, CEPR, CES-ifo & NBER June 2018 Working Paper 2018-06 https://www.frbsf.org/economic-research/publications/working-papers/2018/06/ Suggested citation: Lopez, Jose A., Kris James Mitchener. 2018. “Uncertainty and Hyperinflation: European Inflation Dynamics after World War I,” Federal Reserve Bank of San Francisco Working Paper 2018-06. https://doi.org/10.24148/wp2018-06 The views in this paper are solely the responsibility of the authors and should not be interpreted as reflecting the views of the Federal Reserve Bank of San Francisco or the Board of Governors of the Federal Reserve System. Uncertainty and Hyperinflation: European Inflation Dynamics after World War I Jose A. Lopez Federal Reserve Bank of San Francisco Kris James Mitchener Santa Clara University CAGE, CEPR, CES-ifo & NBER* May 9, 2018 ABSTRACT. Fiscal deficits, elevated debt-to-GDP ratios, and high inflation rates suggest hyperinflation could have potentially emerged in many European countries after World War I. We demonstrate that economic policy uncertainty was instrumental in pushing a subset of European countries into hyperinflation shortly after the end of the war. Germany, Austria, Poland, and Hungary (GAPH) suffered from frequent uncertainty shocks – and correspondingly high levels of uncertainty – caused by protracted political negotiations over reparations payments, the apportionment of the Austro-Hungarian debt, and border disputes. In contrast, other European countries exhibited lower levels of measured uncertainty between 1919 and 1925, allowing them more capacity with which to implement credible commitments to their fiscal and monetary policies.
    [Show full text]
  • Estimating the Effects of Fiscal Policy in OECD Countries
    Estimating the e®ects of ¯scal policy in OECD countries Roberto Perotti¤ This version: November 2004 Abstract This paper studies the e®ects of ¯scal policy on GDP, in°ation and interest rates in 5 OECD countries, using a structural Vector Autoregression approach. Its main results can be summarized as follows: 1) The e®ects of ¯scal policy on GDP tend to be small: government spending multipliers larger than 1 can be estimated only in the US in the pre-1980 period. 2) There is no evidence that tax cuts work faster or more e®ectively than spending increases. 3) The e®ects of government spending shocks and tax cuts on GDP and its components have become substantially weaker over time; in the post-1980 period these e®ects are mostly negative, particularly on private investment. 4) Only in the post-1980 period is there evidence of positive e®ects of government spending on long interest rates. In fact, when the real interest rate is held constant in the impulse responses, much of the decline in the response of GDP in the post-1980 period in the US and UK disappears. 5) Under plausible values of its price elasticity, government spending typically has small e®ects on in°ation. 6) Both the decline in the variance of the ¯scal shocks and the change in their transmission mechanism contribute to the decline in the variance of GDP after 1980. ¤IGIER - Universitµa Bocconi and Centre for Economic Policy Research. I thank Alberto Alesina, Olivier Blanchard, Fabio Canova, Zvi Eckstein, Jon Faust, Carlo Favero, Jordi Gal¶³, Daniel Gros, Bruce Hansen, Fumio Hayashi, Ilian Mihov, Chris Sims, Jim Stock and Mark Watson for helpful comments and suggestions.
    [Show full text]
  • The Economic Policy Response to the Covid-19 Crisis Note for Discussion April 9, 2020 *
    The economic policy response to the Covid-19 crisis Note for discussion April 9, 2020 * The dramatic social distancing measures that were needed to contain the Covid-19 outbreak and save lives have resulted in a major economic crisis. The magnitude and spread of the global decline in output exceeds that triggered by the Global Financial Crisis, if not the Great Depression. But the very nature of the crisis is unprecedented. As in previous major downturns, developing countries are facing a decline in foreign demand and a drop of commodity prices. They are also being locked out from global financial markets, suffer capital outflows and experience a fall of remittances. But in addition to the demand shortfall and the financial stress, this new crisis involves a major supply shock. Domestically, social distancing measures drastically reduce labor supply and increase transaction costs. Internationally, supply chains break down, which may result in shortages of key inputs and potentially in higher food prices. Another important difference with previous crises is the potential, recurrent return of the supply shock until a vaccine is developed, weighing on the prospects for recovery. A crisis of this magnitude and nature is not going to be reverted quickly. Even once the crisis bottoms out, widespread bankruptcies, increased unemployment and under-employment, and a depressed investment climate will make its effects persist. Moreover, developing countries are confronting this crisis from a weaker position compared to the Global Financial Crisis. Some financial sectors are vulnerable, corporate debt is generally high, and sovereign debt levels often constrain the fiscal space available to governments.
    [Show full text]
  • Monetary Policy and the Long Boom
    NOVEMBER/DECEMBER1998 John B. Taylor is a professor of economics at Stanford University. The article that follows is a reprint of The Homer Jones Lecture delivered at Southern Illinois University-Edwardsville on April 16, 1998. Kent Koch provided research assistance. this lecture. This month (April 1998) the Monetary Policy United States economy celebrates seven years of economic expansion. By definition and The Long an economic expansion is the period between recessions; that is, a period of con- Boom tinued growth without a recession. The last recession in the United States ended in April 1991, so as of this April we have had seven John B. Taylor years of expansion and we are still going. This current expansion is a record breaker: regret that I never had the opportunity to to be exact it is the second longest peacetime work or study with Homer Jones. But I expansion in American history. Iknow people who worked and studied with But what is more unusual is that this him, and I have enjoyed talking with them and current expansion was preceded by the reading about their recollections of Homer first longest peacetime expansion in Amer- Jones. What is most striking to me, of all that ican history. That expansion began in has been said and written about Homer Jones, November 1982 and continued through is his incessant striving to learn more about August 1990. It lasted seven years and economics and his use of rigorous economic eight months. Although the 1980s expansion research to improve the practical operation of was the first longest peacetime expansion in economic policy.
    [Show full text]
  • Economic Integration, Macroeconomic Policy and Micro Markets*
    Economic integration, macroeconomic policy and micro markets¤ Christopher Loewald South African National Treasury ABSTRACT: The New Partnership For Africa’s Development (NEPAD) has been established to provide a substantive platform for African countries to initiate a series of policy steps toward more rapid economic growth and poverty reduction. Critics have argued that some of the policies, especially regional integration, will do more harm than good, and have cast the debate as a binary choice between the open and closed economy. Neither a fully closed nor a fully open economy is likely to maximize welfare and growth. In contrast to the notion of policy autonomy in the closed economy, the closed economy requires far more stringent application of price controls, monetary, …scal, and competition policies than do more open economies to prevent rising in‡ation and worsening income distribution. On balance, more open trade and capital relationships are preferred, because they help to ensure consistency between macroeconomic policy and microeconomic behaviour and are more conducive to improving income distribution. ¤Dr Christopher Loewald is Chief Director of International Economics in the National Treasury. The views and opinions in this paper are solely those of the author. They should not be attributed to the National Treasury. The author thanks Kevin Fletcher, Johann Fedderke, Adam Schwartzman and John Luiz for their helpful comments. Economic integration, macroeconomic policy and micro markets 1 1 Introduction Over the past year, NEPAD has emerged as the primary vehicle for bringing African countries into what might be described as the ‘reformist’ wing of the world’s economic and political community.
    [Show full text]
  • CHAPTER 18 Economic Policy
    CHAPTER 18 Economic Policy REVIEWING THE CHAPTER CHAPTER FOCUS The purpose of this chapter is to introduce you to an area of public policy that affects everyone in one way or another: economic policy. The chapter covers both the divided attitudes that voters have toward a “good” economy and the competing theories that economists offer on how to obtain a good economy. The various agencies that participate in formulating government economic policy are reviewed, along with the many stages of producing and implementing the annual federal budget. Finally, the controversial areas of government spending and tax reform are discussed. After reading and reviewing the material in this chapter, you should be able to do each of the following: 1. Show how voters have contradictory attitudes regarding their own and others’ economic benefits. 2. List and briefly explain the four competing economic theories discussed in the chapter. 3. Assess the nature and effect of Reaganomics. 4. List the four major federal government agencies involved in setting economic policy, and explain the role of each. 5. Analyze federal fiscal policy in terms of the text’s four categories of politics. 6. Trace the history of federal government budgeting practices up to the present day. 7. Comment on the prospects and the desirability of lowering federal spending and reforming the income tax. STUDY OUTLINE I. Introduction A. Deficit spending, a feature of the government since 1960 B. National debt is the total of all deficits C. Explanations 1. Economic reason a) Debt is a concern only if payments cannot be met b) Or the currency is no longer regarded as stable and valuable c) Interest on the debt is affordable—8 percent of all federal expenditures d) Future economic demands on the government may create a problem 2.
    [Show full text]
  • When the Periphery Became More Central: from Colonial Pact to Liberal Nationalism in Brazil and Mexico, 1800-1914 Steven Topik
    When the Periphery Became More Central: From Colonial Pact to Liberal Nationalism in Brazil and Mexico, 1800-1914 Steven Topik Introduction The Global Economic History Network has concentrated on examining the “Great Divergence” between Europe and Asia, but recognizes that the Americas also played a major role in the development of the world economy. Ken Pomeranz noted, as had Adam Smith, David Ricardo, and Karl Marx before him, the role of the Americas in supplying the silver and gold that Europeans used to purchase Asian luxury goods.1 Smith wrote about the great importance of colonies2. Marx and Engels, writing almost a century later, noted: "The discovery of America, the rounding of the Cape, opened up fresh ground for the rising bourgeoisie. The East-Indian and Chinese markets, the colonisation of America [north and south] trade with the colonies, ... gave to commerce, to navigation, to industry, an impulse never before known. "3 Many students of the world economy date the beginning of the world economy from the European “discovery” or “encounter” of the “New World”) 4 1 Ken Pomeranz, The Great Divergence , Princeton: Princeton University Press, 2000:264- 285) 2 Adam Smith in An Inquiry into the Nature and Causes of the Wealth of Nations (1776, rpt. Regnery Publishing, Washington DC, 1998) noted (p. 643) “The colony of a civilized nation which takes possession, either of a waste country or of one so thinly inhabited, that the natives easily give place to the new settlers, advances more rapidly to wealth and greatness than any other human society.” The Americas by supplying silver and “by opening a new and inexhaustible market to all the commodities of Europe, it gave occasion to new divisions of labour and improvements of art….The productive power of labour was improved.” p.
    [Show full text]
  • Is Our Current International Economic Environment Unusually Crisis Prone?
    Is Our Current International Economic Environment Unusually Crisis Prone? Michael Bordo and Barry Eichengreen1 August 1999 1. Introduction From popular accounts one would gain the impression that our current international economic environment is unusually crisis prone. The European of 1992-3, the Mexican crisis of 1994-5, the Asian crisis of 1997-8, and the other currency and banking crises that peppered the 1980s and 1990s dominate journalistic accounts of recent decades. This “crisis problem” is seen as perhaps the single most distinctive financial characteristic of our age. Is it? Even a cursory review of financial history reveals that the problem is not new. One classic reference, O.M.W. Sprague’s History of Crises Under the National Banking System (1910), while concerned with just one country, the United States, contains chapters on the crisis of 1873, the panic of 1884, the stringency of 1890, the crisis of 1893, and the crisis of 1907. One can ask (as does Schwartz 1986) whether it is appropriate to think of these episodes as crises — that is, whether they significantly disrupted the operation of the financial system and impaired the health of the nonfinancial economy — but precisely the same question can be asked of certain recent crises.2 In what follows we revisit this history with an eye toward establishing what is new and 1 Rutgers University and University of California at Berkeley, respectively. This paper is prepared for the Reserve Bank of Australia Conference on Private Capital Flows, Sydney, 9-10 August 1999. It builds on an earlier paper prepared for the Brookings Trade Policy Forum (Bordo, Eichengreen and Irwin 1999); we thank Doug Irwin for his collaboration and support.
    [Show full text]
  • The Ends of Four Big Inflations
    This PDF is a selection from an out-of-print volume from the National Bureau of Economic Research Volume Title: Inflation: Causes and Effects Volume Author/Editor: Robert E. Hall Volume Publisher: University of Chicago Press Volume ISBN: 0-226-31323-9 Volume URL: http://www.nber.org/books/hall82-1 Publication Date: 1982 Chapter Title: The Ends of Four Big Inflations Chapter Author: Thomas J. Sargent Chapter URL: http://www.nber.org/chapters/c11452 Chapter pages in book: (p. 41 - 98) The Ends of Four Big Inflations Thomas J. Sargent 2.1 Introduction Since the middle 1960s, many Western economies have experienced persistent and growing rates of inflation. Some prominent economists and statesmen have become convinced that this inflation has a stubborn, self-sustaining momentum and that either it simply is not susceptible to cure by conventional measures of monetary and fiscal restraint or, in terms of the consequent widespread and sustained unemployment, the cost of eradicating inflation by monetary and fiscal measures would be prohibitively high. It is often claimed that there is an underlying rate of inflation which responds slowly, if at all, to restrictive monetary and fiscal measures.1 Evidently, this underlying rate of inflation is the rate of inflation that firms and workers have come to expect will prevail in the future. There is momentum in this process because firms and workers supposedly form their expectations by extrapolating past rates of inflation into the future. If this is true, the years from the middle 1960s to the early 1980s have left firms and workers with a legacy of high expected rates of inflation which promise to respond only slowly, if at all, to restrictive monetary and fiscal policy actions.
    [Show full text]
  • Microeconomic Policies and Structural Change 235
    Microeconomic Policies and Structural Change 235 Microeconomic Policies and Structural Change Peter Forsyth 1. Introduction From about the mid 1980s, Australia has sought to improve the performance of its markets and industries by actively implementing a program of microeconomic reform. It was recognised that there was a plethora of distortions which had the effect of promoting inefficient performance, and the reform program was directed towards removing these distortions. These reforms held the promise of significantly increasing real GDP per capita. Financial deregulation and reductions in protection came first in the early to mid 1980s. After this, governments turned their attention to improving the performance of public enterprises and regulated industries. Government services were subjected to competitive tendering. In the 1990s governments turned their attention to more difficult sectors, such as the natural monopoly utility industries, which they have been attempting to open up to more competition. Reform is still ongoing, though much of the effort is being directed towards completing and redesigning reforms already started, and extending the scope of competition policy. There remain some areas, such as health and education, which are regarded, rightly, as difficult, and in which there has been limited progress. Now is a good time to review progress, since sufficient time has elapsed for many of the reforms to produce measurable outcomes. In this paper, a start is made by looking briefly at the overall productivity picture. Reforms are not directed solely at productivity, and their possible other consequences are examined in Section 3. Reform brings costs, some of which may be taken account of in productivity measures, and some of which may not; these are considered in Section 4.
    [Show full text]
  • THE ECONOMIC CONSEQUENCES of FINANCIAL REGIMES: a NEW LOOK at the BANKING POLICIES of MEXICO and BRAZIL, 1890-1910 América Latina En La Historia Económica
    América Latina en la Historia Económica. Revista de Investigación ISSN: 1405-2253 [email protected] Instituto de Investigaciones Dr. José María Luis Mora México Gerber, James; Passananti, Thomas THE ECONOMIC CONSEQUENCES OF FINANCIAL REGIMES: A NEW LOOK AT THE BANKING POLICIES OF MEXICO AND BRAZIL, 1890-1910 América Latina en la Historia Económica. Revista de Investigación, vol. 22, núm. 1, enero-abril, 2015, pp. 35-58 Instituto de Investigaciones Dr. José María Luis Mora Distrito Federal, México Available in: http://www.redalyc.org/articulo.oa?id=279133751002 How to cite Complete issue Scientific Information System More information about this article Network of Scientific Journals from Latin America, the Caribbean, Spain and Portugal Journal's homepage in redalyc.org Non-profit academic project, developed under the open access initiative THE ECONOMIC CONSEQUENCES OF FINANCIAL REGIMES: A NEW LOOK AT THE BANKING POLICIES OF MEXICO AND BRAZIL, 1890-1910 CONSECUENCIAS ECONÓMICAS DE LOS REGÍMENES FINANCIEROS: UNA NUEVA PERSPECTIVA DE LAS POLÍTICAS BANCARIAS DE MÉXICO Y BRASIL, 1890-1910 James Gerber and Thomas Passananti San Diego State University, San Diego, Estados Unidos de América [email protected]; [email protected] Abstract. This paper compares the consequences of different financial policies adopted in Mexico and Brazil in the decades before World War I. In the 1890s, the national governments of Mexico and Brazil pursued strikingly different policies toward banking regulation. In Brazil, after the fall of the monarchy, authorities briefly experimented with financial liberalization. In Mexico, in the same era, public officials created a banking system with more constraints and regulations. We compare the costs and benefits to the financial systems and the macroeconomic effects of these different banking regimes, thereby revisiting two classic concerns of financial historians, the costs of financial fragility versus the benefits of financial liberalization.
    [Show full text]