The return of Keynes and the Phillips curve in Latin America: evidence from four countries

Abstract

Robert Rowthorn, in his Godley–Tobin Lecture, suggests that Keynesian policies have again been incorporated by the mainstream of the profession, and the old Phillips relation is again relevant. In other words, there seems to be a persistent trade-off between inflation, wage inflation in particular, and unemployment rates, properly measured, which would create the space for Keynesian policies. This paper discusses the return of Keynesian economics, in particular in Latin American economies. While it is true that Keynesian economics made a comeback in terms of policy in Latin America, as in other parts of the world, in the aftermath of the global financial crisis of 2008–2009, it is also true that the Keynesian moment was relatively weak and short-lived. The evidence in Latin America for a Phillips curve is relatively weak, and suggests that inflation is often cost-push rather than demand-pull, which could be understood to suggest that there is space for expansionary fiscal policy, at least in the absence of an external constraint. The authors remain skeptical about the return of Keynesian economics at the theoretical level, and the possibilities for Keynesian policies in the region.

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“…Мы сфокусируем внимание на краткосрочных эффектах, связанных с экономическими шоками, и выявлении взаимовлияния этих шоков и соответствующих макроэкономических индикаторов на примере стран Латинской Америки как модели. Продолжая полемику на выборке стран Латинской Америки, E. P. Caldentey и соавторы на различных моделях эмпирически протестировали взаимосвязи, описываемые кривой Филлипса, за 1992-2016 годы в Аргентине, Бразилии, Чили и Мексике (Caldentey et al, 2020). Ученые сделали вывод, что данные не содержат свидетельств существования подобной взаимосвязи для большинства стран.…”

Pandemia y política económica: la política monetaria en discusión

“…El lugar de la política monetaria quedó entonces reservado a la estabilización de los precios de la economía y durante los siguientes 40 años este sería este el principal objetivo de la política económica descartando el gasto público como herramienta de estabilización. El espacio para la actuación de la política fiscal en relación con la demanda agregada se relegó únicamente a los eventos en los que la política monetaria convencional resultara inoperante (Caldentey et al, 2020).…”