A workshop on the Fiscal and Monetary History of Peru took place at the Social Science building of the Pontifical Catholic University of Peru (PUCP) on Wednesday November 16, 2016. The workshop was inaugurated by Tim Kehoe and Juan Pablo Nicolini, as the organizers of the project on Fiscal and Monetary History of Latin America, and by Efraín Gonzales de Olarte, as Academic Vice Director of PUCP. Marco Vega, currently Deputy Manager for Research at Peru’s Central Bank (BCRP), presented the draft of the chapter “Fiscal and Monetary History of Peru, 1960-2010,” co-authored with Cesar Martinelli, professor of economics at George Mason University.
The presentation was followed by three blocks of discussants. Efrain Gonzales de Olarte and Gonzalo Llosa, professor of business at PUCP and executive of Prima AFP, discussed the period of the 1970s. Main point of the discussions were the need to understand better the political economy of the period of expansion of the government responsibilities in that period, which was not matched by an increase in the ability of the state to raise revenue. There was a debate on how to quantify the size of the state in the economy, taking into account the number and scope of state owned firms.
Bruno Seminario, professor of economics at University of the Pacific and Oscar Dancourt, professor of economics at PUCP and formerly President of BCRP, discussed the policies of the 1980s, including the period of hyperinflation. The discussion centered on (1) how the hyper inflationary period was caused by “bad luck” (lower prices of mineral, climate shocks) affecting the exchange rate, or monetary emission to finance government spending, and (2) who government spending was really the result of expansionary fiscal policies, or debt repayment in the face of increased interest rates.
Renzo Rossini, currently General Manager of BCRP and Waldo Mendoza, professor of economics at PUCP and formerly Deputy Minister of the Treasury in Peru, discussed the period of stabilization in the 1990s. The discussion centered on the roles played by fiscal stabilization versus exchange rate management in the end of the hyperinflation, with varying emphasis put in the adoption of central bank autonomy and the end of fiscal irresponsibility.
The workshop was closed by general comments by Juan Pablo Nicolini and Tim Kehoe.