The characteristics of recent capital inflows into Latin America are discussed. It is argued that these inflows are partly explained by conditions outside the region, like the recession in the United States and lower international interest rates. The importance of external factors suggests that...

A central proposition regarding effects of different mechanisms of financing public expenditures is that, under specific circumstances, it makes no difference to the level of aggregate demand if the government finances its outlays by debt or taxation. This so-called Ricardian equivalence states...