American Economic Policy and the International Debt Crisis
29 Pages Posted: 25 Jun 2001 Last revised: 28 Aug 2022
Date Written: December 1990
Abstract
This paper advances the hypothesis that the world debt crisis was mainly induced by the dramatic rise of US interest rates in the first half of the eighties. It sees this rise in interest rates primarily as a result of a tight US monetary policy and excessively large investment incentives provided by the 1981 Us tax reform. A welfare analysis shows that the policies could have increased the US advantage from lending its capital abroad, had they been more moderately designed. The actual policies, however, were by far too strong to produce this result.
Suggested Citation: Suggested Citation
Sinn, Hans-Werner, American Economic Policy and the International Debt Crisis (December 1990). NBER Working Paper No. w3532, Available at SSRN: https://ssrn.com/abstract=274549
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