IDEAS home Printed from https://ideas.repec.org/p/rbp/wpaper/2019-010.html
   My bibliography  Save this paper

The economic legacy of General Velasco: Long-term consequences of interventionism

Author

Listed:
  • Martinelli, Cesar
  • Vega, Marco

    (Banco Central de Reserva del Perú)

Abstract

We apply synthetic control methods to study the long-term consequences of the interventionist and collectivist reforms implemented by the Peruvian military junta of 1968-1975. We compare long-term outcomes for the Peruvian economy following the radical reforms of the early 1970s with those of two controls made of similar countries, one chosen in the Latin American region and another one chosen from the world at large. We find that the economic legacy of the junta includes sizable loses in GDP along two decades, beyond those that can be attributed to adverse international circumstances. The evidence suggests that those loses can be attributed both to a decline in capital accumulation and to a fall in productivity.

Suggested Citation

  • Martinelli, Cesar & Vega, Marco, 2019. "The economic legacy of General Velasco: Long-term consequences of interventionism," Working Papers 2019-010, Banco Central de Reserva del Perú.
    • Handle: RePEc:rbp:wpaper:2019-010
    as

    Download full text from publisher

    File URL: https://www.bcrp.gob.pe/docs/Publicaciones/Documentos-de-Trabajo/2019/documento-de-trabajo-010-2019.pdf
    File Function: Application/pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Becker, Martin & Klößner, Stefan, 2018. "Fast and reliable computation of generalized synthetic controls," Econometrics and Statistics, Elsevier, vol. 5(C), pages 1-19.
    2. Timothy J. Kehoe & Carlos Gustavo Machicado & José Peres-Cajías, 2019. "The Monetary and Fiscal History of Bolivia, 1960-2017," Staff Report 579, Federal Reserve Bank of Minneapolis.
    3. Alberto Abadie & Alexis Diamond & Jens Hainmueller, 2015. "Comparative Politics and the Synthetic Control Method," American Journal of Political Science, John Wiley & Sons, vol. 59(2), pages 495-510, February.
    4. Alberto Abadie & Javier Gardeazabal, 2003. "The Economic Costs of Conflict: A Case Study of the Basque Country," American Economic Review, American Economic Association, vol. 93(1), pages 113-132, March.
    5. Grier, Kevin & Maynard, Norman, 2016. "The economic consequences of Hugo Chavez: A synthetic control analysis," Journal of Economic Behavior & Organization, Elsevier, vol. 125(C), pages 1-21.
    6. Martinelli, César & Vega, Marco, 2018. "Monetary and Fiscal History of Peru 1960-2010: Radical Policy Experiments, Inflation and Stabilization," Working Papers 2018-007, Banco Central de Reserva del Perú.
    7. Eduardo Cavallo & Sebastian Galiani & Ilan Noy & Juan Pantano, 2013. "Catastrophic Natural Disasters and Economic Growth," The Review of Economics and Statistics, MIT Press, vol. 95(5), pages 1549-1561, December.
    8. Abadie, Alberto & Diamond, Alexis & Hainmueller, Jens, 2011. "Synth: An R Package for Synthetic Control Methods in Comparative Case Studies," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 42(i13).
    9. Abadie, Alberto & Diamond, Alexis & Hainmueller, Jens, 2010. "Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program," Journal of the American Statistical Association, American Statistical Association, vol. 105(490), pages 493-505.
    10. Shane Hunt, 2011. "La formación de la economía peruana. Distribución y crecimiento en la historia del Perú y América Latina," Libros PUCP / PUCP Books, Fondo Editorial - Pontificia Universidad Católica del Perú, edition 1, number lde-2011-03.
    11. Marco Vega & César Martinelli, 2018. "The Monetary and Fiscal History of Peru, 1960-2017: Radical Policy Experiments, Inflation and Stabilization," Documentos de Trabajo / Working Papers 2018-468, Departamento de Economía - Pontificia Universidad Católica del Perú.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pekka Malo & Juha Eskelinen & Xun Zhou & Timo Kuosmanen, 2024. "Computing Synthetic Controls Using Bilevel Optimization," Computational Economics, Springer;Society for Computational Economics, vol. 64(2), pages 1113-1136, August.
    2. Kuosmanen, Timo & Zhou, Xun & Eskelinen, Juha & Malo, Pekka, 2021. "Design Flaw of the Synthetic Control Method," MPRA Paper 106328, University Library of Munich, Germany.
    3. Monastiriotis, Vassilis & Zilic, Ivan, 2020. "The economic effects of political disintegration: Lessons from Serbia and Montenegro," European Journal of Political Economy, Elsevier, vol. 65(C).
    4. Diego D'iaz & Pablo Paniagua & Cristi'an Larroulet, 2024. "Earthquakes and the wealth of nations: The cases of Chile and New Zealand," Papers 2405.12041, arXiv.org.
    5. David Gilchrist & Thomas Emery & Nuno Garoupa & Rok Spruk, 2023. "Synthetic Control Method: A tool for comparative case studies in economic history," Journal of Economic Surveys, Wiley Blackwell, vol. 37(2), pages 409-445, April.
    6. Cruz A. Echevarría & Javier García-Enríquez, 2020. "The economic cost of the Arab Spring: the case of the Egyptian revolution," Empirical Economics, Springer, vol. 59(3), pages 1453-1477, September.
    7. Samuel Verevis & Murat Üngör, 2021. "What has New Zealand gained from The FTA with China?: Two counterfactual analyses†," Scottish Journal of Political Economy, Scottish Economic Society, vol. 68(1), pages 20-50, February.
    8. Daniel Albalate & Germà Bel & Ferran A. Mazaira-Font, 2020. "Ensuring Stability, Accuracy and Meaningfulness in Synthetic Control Methods: The Regularized SHAP-Distance Method," IREA Working Papers 202005, University of Barcelona, Research Institute of Applied Economics, revised Apr 2020.
    9. Bruno Ferman & Cristine Pinto & Vitor Possebom, 2020. "Cherry Picking with Synthetic Controls," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 39(2), pages 510-532, March.
    10. Silvia Marchesi & Tania Masi, 2019. "Sovereign risk after sovereign restructuring. Private and official default," Working Papers 423, University of Milano-Bicocca, Department of Economics, revised Nov 2019.
    11. Robbert Maseland & Rok Spruk, 2023. "The benefits of US statehood: an analysis of the growth effects of joining the USA," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 17(1), pages 49-89, January.
    12. Giovanni Peri & Derek Rury & Justin C. Wiltshire, 2020. "The Economic Impact of Migrants from Hurricane Maria," NBER Working Papers 27718, National Bureau of Economic Research, Inc.
    13. Giulio Grossi & Marco Mariani & Alessandra Mattei & Patrizia Lattarulo & Ozge Oner, 2020. "Direct and spillover effects of a new tramway line on the commercial vitality of peripheral streets. A synthetic-control approach," Papers 2004.05027, arXiv.org, revised Nov 2023.
    14. Marchesi, Silvia & Masi, Tania, 2021. "Life after default. Private and official deals," Journal of International Money and Finance, Elsevier, vol. 113(C).
    15. Stefan Klößner & Ashok Kaul & Gregor Pfeifer & Manuel Schieler, 2018. "Comparative politics and the synthetic control method revisited: a note on Abadie et al. (2015)," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 154(1), pages 1-11, December.
    16. Nadine McCloud, 2022. "Does domestic investment respond to inflation targeting? A synthetic control investigation," International Economics, CEPII research center, issue 169, pages 98-134.
    17. Kaul, Ashok & Klößner, Stefan & Pfeifer, Gregor & Schieler, Manuel, 2015. "Synthetic Control Methods: Never Use All Pre-Intervention Outcomes Together With Covariates," MPRA Paper 83790, University Library of Munich, Germany.
    18. Isaksen, Elisabeth Thuestad, 2020. "Have international pollution protocols made a difference?," Journal of Environmental Economics and Management, Elsevier, vol. 103(C).
    19. Anttonen, Jetro & Kuusi, Tero & Lehmus, Markku & Orjasniemi, Seppo, 2019. "2013 – The Finnish Divergence," ETLA Brief 76, The Research Institute of the Finnish Economy.
    20. Nadine McCloud & Ajornie Taylor, 2022. "Does inflation targeting matter for international trade? A synthetic control analysis," Empirical Economics, Springer, vol. 63(5), pages 2427-2478, November.

    More about this item

    Keywords

    Output loss; synthetic controls; military nationalism; populism; collectivism; Peruvian Revolution;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rbp:wpaper:2019-010. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Research Unit (email available below). General contact details of provider: https://edirc.repec.org/data/bcrgvpe.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.