POLICY INTERACTIONS BETWEEN THE OECD COUNTRIES AND LATIN AMERICA IN THE 1980s

This paper describes a new empirical model of Latin America built to study North-South macroeconomic interactions. Special attention is paid to the supply-side determination of the natural rate of output and to asset accumulation. The model's properties are presented both empirically and by means of analytical representation. The model is used to examine the effects of global shocks on Latin America as simulated by the LBS/NIESR Global Econometric Model (GEM). In particular, the authors assess the relative impact of OECD monetary contraction and lack of fiscal policy coordination on the continent in the 1980s. Coauthors are David Currie, T. G. Srinivasan and David Vines. Copyright 1992 by Blackwell Publishers Ltd and The Victoria University of Manchester