Paraguay: Corruption, Reform, and the Financial System
International Monetary Fund, Sep 7, 2005 - Business & Economics - 278 pages
Following some historical background, this paper describes how corruption is manifested in Paraguay. The paper distinguishes between factors that explain the growth performance of Paraguay since 1960 (where corruption does not directly enter as a significant factor) and factors that explain the relative level of income of Paraguay in the past 40 or 50 years compared with other countries. It then illustrates how Paraguay's weak institutions may have led to long-term growth below its potential. Finally, the authors briefly consider how Paraguay could improve its institutions. To the extent that prudent policies and the willingness to consider the adoption of international best practices will exert pressure for change in Paraguay, a gradual improvement of institutional quality will ensue, which is necessary for sustained long-run growth.
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___________________________________________________________________________ Figure ___________________________________________________________________________ Table aguinaldo Argentina Asunción Banco Sudameris banking system base wage Brazil caja fiscal Chaco War pensions co-integration coefficient cohort Colorado Party compute contributing plans corruption countries decline deposits Diario ABC disbursements economic effective exchange rate equilibrium real exchange finance companies financial institutions financial sector financial system fiscal balance Fund staff estimates GDP per capita guaraní Hodrick-Prescott filter income initial GDP institutional quality interest rates International Monetary Fund investment Last wage liquidity loans locally owned private long-run equilibrium majority-owned foreign banks misalignment Multibanco net present value Paraguay Paraguay’s Paraguayan pension recipients percent of GDP percent of initial postreform scenario prereform scenario present value private banks productivity quarterly data ratio real effective exchange real exchange rate REER reform After reform replacement rate resolution law retirement age Sources survivor pensions teachers terms of trade value of deficits variables wholly foreign-owned banks World Bank