Market discipline and exuberant foreign borrowing
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Date
2002
Journal Title
Journal ISSN
Volume Title
Publisher
Banco Central de Chile
Abstract
Description
The debt crisis of the 1980s confirmed what most economists already knew well: the public sector cannot be trusted to make the rigth choices on behalf of society, especially in matters-such as foreign borrowing- whose ultimate costs may not be fully internalized by voters. The failure of the public sector suggested market discipline as the solution for the efficient channeling of foreign savings into capital-scare developing countries, to be implemented through the liberalization of the capital account and fiscal restraint.
Keywords
CRISIS ECONÓMICA 1980, PRÉSTAMOS INTERNACIONALES