A Decade Lost and Found: Mexico and Chile in the 1980s

Bergoeing, Raphael; Kehoe, Patrick J.; Kehoe, Timothy J.; Soto, Raimundo

doi:10.1006/redy.2001.0150

Cited by 182 publications

(98 citation statements)

References 9 publications

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“…Although tractability issues may arise, the model could also be extended to study the role of bankruptcy arrangements in amplifying or ameliorating the effects of aggregate shocks as in Verani (2014), and in shaping recoveries from pronounced recessions. Circumstantial evidence can be found in Bergoeing et al (2007) suggesting that differences in bankruptcy law can help account for the asymmetric recoveries of Chile an Mexico from similar negative shocks experienced in the early 1980s.…”

Section: Discussionmentioning

confidence: 99%

Bankruptcy choice with endogenous financial constraints

Tamayo

2017

Review of Economic Dynamics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Any dispute related to the use of the works of the IDB that cannot be settled amicably shall be submitted to arbitration pursuant to the UNCITRAL rules. The use of the IDB's name for any purpose other than for attribution, and the use of IDB's logo shall be subject to a separate written license agreement between the IDB and the user and is not authorized as part of this CC-IGO license. Terms of use: Documents inFollowing a peer review process, and with previous written consent by the Inter-American Development Bank (IDB), a revised version of this work may also be reproduced in any academic journal, including those indexed by the American Economic Association's EconLit, provided that the IDB is credited and that the author(s) receive no income from the publication. Therefore, the restriction to receive income from such publication shall only extend to the publication's author(s). With regard to such restriction, in case of any inconsistency between the Creative Commons IGO 3.0 Attribution-NonCommercial-NoDerivatives license and these statements, the latter shall prevail.Note that link provided above includes additional terms and conditions of the license.The opinions expressed in this publication are those of the authors and do not necessarily reflect the views of the Inter-American Development Bank, its Board of Directors, or the countries they represent.Cataloging-in-Publication data provided by the Inter-American Development Bank Felipe Herrera Library Inter-American Development BankAbstract In this paper we study firm dynamics and industry equilibrium when firms under financial distress face a non-trivial choice between alternative bankruptcy procedures. Given limited commitment and asymmetric information, financial contracts specify default, renegotiation and reorganization policies. Renegotiation entails a redistribution of social surplus, while reorganization takes the form of enhanced creditor monitoring. Firms with better contract histories are less likely to default, but, contingent on default, firms with better outside options successfully renegotiate, in line with the empirical evidence. Unless monitoring is too costly, renegotiation leads to reorganization, which resembles actual bankruptcy practice. We calibrate the model to match certain aspects of the data on bankruptcy and firm dynamics in the U.S.. Our counterfactual experiments suggest that poorly designed bankruptcy arrangements can increase substantially the fraction of firms facing...

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Section: Discussionmentioning

confidence: 99%

Bankruptcy choice with endogenous financial constraints

Tamayo

2017

Review of Economic Dynamics

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“…We set the persistence of the stationary TFP process (ρ z ) to the value used by Neumeyer and Perri (2005) for Argentina and estimated by Aguiar and Gopinath (2007) for the stationary component of TFP in Mexico. The depreciation rate of capital (δ) is set at 8% annually, consistent with the study by Bergoeing et al (2002) of the Chilean economy. The parameter governing the debt adjustment cost (ψ) is set to a low value that assures stationary behavior.…”

Section: Calibration Externally Calibrated Parametersmentioning

confidence: 99%

Fewer but Better: Sudden Stops, Firm Entry, and Financial Selection

Ates

Saffie

2016

internationalfinance

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We incorporate endogenous technical change into a real business cycle small open economy framework to study the productivity costs of sudden stops. In this economy, productivity growth is determined by the entry of new firms and the expansion decisions of incumbent firms. New firms are created after the implementation of business ideas, yet the quality of ideas is heterogeneous and good ideas are scarce. Selection of the most promising ideas gives rise to a trade-off between mass (quantity) and composition (quality) in the entrant cohort. Chilean plant-level data from the sudden stop triggered by the Russian sovereign default in 1998 confirm the main mechanism of the model, as firms born during the credit shortage are fewer, but better. The quantitative analysis shows that four years after the crisis, 12.5% of the output deviation from trend is due to permanent productivity losses. Distortions in the entry margin account for 40% of the loss, and the remainder is due to distortion in the expansion decisions of incumbents.

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“…1 There is no agreement, however, on the theoretical framework with which to rationalize these facts. Influential articles, such as Kydland and Zarazaga (2003) and Bergoeing et al (2002), study the dynamics of emerging markets driven by stationary technology shocks. 2 Other authors, alternatively, highlight the importance of non-stationary shocks or explicitly introduce frictions to the standard open economy real business cycle model.…”

Section: Introductionmentioning

confidence: 99%

Parameter drifts, misspecification and the real exchange rate in emerging countries

Seoane

2016

Journal of International Economics

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This paper reviews the baseline framework for the analysis of emerging economies. Using Argentinean data, I estimate a small open economy model with stochastic trend, working capital constraint and augmented with time-varying parameters. I find that "structural" technological and financial parameters of one-sector model are time-varying during 1936-2006. Time-varying parameters correlate with the real exchange rate, suggesting potential misspecification of the one-sector model. Therefore, I propose a two-sector model that endogenously accounts for the real exchange rate. In this model, stationary productivity shocks and the country premium together explain a large share of the variability observed in the data.

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A Decade Lost and Found: Mexico and Chile in the 1980s

Cited by 182 publications

References 9 publications

Bankruptcy choice with endogenous financial constraints

Bankruptcy choice with endogenous financial constraints

Fewer but Better: Sudden Stops, Firm Entry, and Financial Selection

Parameter drifts, misspecification and the real exchange rate in emerging countries

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