Richebacher's bleak scenario

Brad De Long delong at econ.Berkeley.EDU
Tue Nov 2 11:10:13 PST 1999

>Brad De Long wrote:
>>As Stanley Fischer never tires of saying, the primary point of the
>>peso support package was to help *Mexico.*
>This is a bit hard to believe. Why this concern for Mexico and not,
>say, Africa? Insofar as there was any IMF (meaning U.S. Treasury)
>concern about Mexico's domestic economy, it was to keep it together
>enough to slow the northward flow of migrants. I'm not even going to
>mention the relative role of private creditors (large for Mexico,
>tiny for Africa).

It seemed clear at the time (to me at least) that a big loan guarantee to Mexico had a good chance of stemming (or at least shortening the recession arising from) Mexico's currency crisis, in large part because it seemed to be driven by a panic flight from Mexico by New York investors.

I don't know what to do (besides convince Congress to multiply the foreign aid budget tenfold) to improve the chances for economic growth in much of sub-Saharan Africa...

Brad DeLong

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