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Growth Recoveries (from Collapses)

Year of Publication: 
2021
Author(s): 
Juan Francisco
Meneses Jose Luis Saboin
Organization Name: 
Inter-American Development Bank
Acronym: 
IBD
Full Date: 
July 2021
Category: 
Reports
Theme: 
Government
Business
Keyword(s): 
economic growth
Growth Recoveries
Growth Collapses
Institutions
Event Analysis.
Abstract: 
This paper analyzes the behavior of a long list of economic variables during episodes of recovery from an economic collapse. A set of stylized facts is proposed so as to de- pict what in this work is called “growth recoveries”. Through different estimation techniques, it is inferred under which conditions and policies the likelihood of experi- encing a growth recovery increases. The results of the paper indicate that collapses tend to occur in countries with high dependence on natural resource rents, macroe- conomic mismanagement, low levels of democratic accountability and rule of law and high levels of conflict. Recoveries, on the other hand, tend to be longer than col- lapses and are more likely to occur in contexts of: improved external conditions, less natural resource rents, balanced fiscal accounts, where the exchange rate corrects but within a more fixed exchange rate regime and a more restricted financial account, and where there are: rebounds in private consumption, increases in international trade and improvements on property rights.