Macroeconomic Interactions Between North And South

This volume contains the proceedings of a September 1987 conference and focuses on the North-South macroeconomic interactions.

Researchers have begun to apply economic techniques initially developed to analyse the industrialised countries to analyse North-South interactions in the world economy. This volume, derived from a CEPR conference, brings together theoretical and empirical papers on fiscal, monetary and trade linkages between the North and South. The papers use the advances in the use of the major macroeconomic models to simulate global and inter-regional interactions, and to analyse the implications for the South of macroeconomic developments in the North. They also examine international policy questions in a genuinely global context, and consider the design of policy packages for the Third World (aid versus trade, growth-oriented adjustment) in an empirical context. This volume provides a useful overview of the flourishing research area relating to interactions between North and South, and highlights areas where future research is needed.

Economic Aspects of North-South Interaction analyses the macroeconomic aspects of north-south interaction. The events of the past two decades underscore the ever-growing macroeconomic interdependence between nations and blocs of nations. North-South interactions take place in a highly asymmetric manner. The North wields the greater economic and bargaining power and may ignore the South in the formulation of its own macroeconomic policies, which are governed by Northern (and ultra-Northern) considerations. These policies have spillover effects for the South and profoundly affect Southern income, terms of trade and future growth prospects. * Uses macroecnomic models to analyze North-South interaction * Includes coverage of topical issues, including debt crisis, environment, and protectionism * Presents comparisons with eastern European problems

Copublished with the Brookings Institution, Washington D.C. and the Centre for Economic Policy Research, London, and edited by Ralph Bryant, David Currie, Jacob A. Frenkel, Paul Masson, and Richard Portes, this volume considers economic interdependence among well developed countries as well as between them and the developing regions of the world.

Vincent Parkin explains the nature and causes of chronic inflation in middle-income developing countries by focusing on the Brazilian experience.

This paper provides preliminary econometric evidence suggesting that the traditional trade-based business cycle linkages between the North and the South have changed. Many countries in the South, in particular in Asia, appear to have become more resilient to cyclical movements in the North, and to have come to play a more significant role in sustaining global activity, in particular during the 1991-93 slowdown. A number of factors may have contributed to these changes: improved domestic policies and more open trade and exchange regimes; closer financial linkages with the North and a substantial increase in capital flows; a marked rise in inter-regional trade; and greater diversification of the exports of the South.