Portrait of the economist as a young man: Raúl Prebisch’s evolving views on the business cycle and money, 1919-1949

Abstract

This paper analyses Raúl Prebisch's lesser-known contributions to economic theory, related to the business cycle and heavily informed by the Argentine experience. His views of the cycle emphasize the common nature of the cycle in the centre and the periphery as one unified phenomenon. While his rejection of orthodoxy is less than complete, some elements of what would become a more Keynesian position are developed. In particular, there is a preoccupation with the management of the balance of payments and the need for capital controls as a macroeconomic management tool, well before Keynes and White's plans led to the Bretton Woods agreement. In the process it is clear that Prebisch developed several ideas that are still relevant for understanding cyclical fluctuations in the periphery and that he became more concerned with the ability to take advantage of cyclical booms to maintain sustained economic growth.

Raúl Prebisch and the evolving uses of ‘centre-periphery’ in economic analysis

“…Since their 2007 publication, Pérez-Caldentey and Vernengo (2012, 2015, 2016 advanced additional and valuable contributions that consider Prebisch's research efforts prior to his starting to work for the UN's Economic Commission for Latin America (ECLA) in 1949, a department of the United Nations that is also known in Spanish language as Comisión Económica para América Latina, or CEPAL-with those employed at CEPAL sometimes noted affectionately as Cepalians.…”

How Industrialization Became the Core of Raúl Prebisch’s Thought

“…The Great Depression Gives Impulse to the Domestic Industry in a Short-Term Perspective It is generally accepted in the literature that the Great Depression was a milestone in Prebisch's thinking (Gurrieri 2001;González and Pollock 1991;Pérez Caldentey and Vernengo 2012). Indeed, when the crisis started, Prebisch still adhered to the quantity theory of money and relied on market self-regulation for exiting the crisis.…”

“…Norberto González and David Pollock (1991) gave a nuanced view on how Prebisch’s thought changed from 1919 to 1943: his thinking was not linear, yet it maintained some continuity. Esteban Pérez Caldentey and Matías Vernengo analyzed John Maynard Keynes’s influence on Prebisch (2015) and his cycle theory (2011, 2016), as well as the evolution of his thought before the 1950s (2012). Joseph Love (1980, 1996a, 1996b) has studied some aspects of the formation of Prebisch’s thought and its theoretical influences.…”

Latin America and world economic turmoil

“…This gave rise to the conception of underdevelopment in Prebisch on which Furtado (1993) highlights the following with profound elegance: from the theoretical standpoint Prebisch's greatest contribution 24The "young" Prebisch proposed a development pattern whose main objective would be industrialization, with the aim of promoting changes in the productive structure in response to the high elasticity of demand for manufactures. Thus, industrialization and productivity growth in primary production became complementary (Pérez Caldentey and Vernengo, 2012). theory of Latin American underdevelopment.…”