Abstract

CALDERON VILLARREAL, Cuauhtémoc. The Oil Boom and Foreign debt: the case of a "small economy". Inv. Econ [online]. 2002, vol.62, n.239, pp.75-97. ISSN 0185-1667.

Presupposing the existence of a small economy, this paper develops a theoretical model de­ signed to study the effect of acquiring foreign debt. The model is derived from the macroeconomic mismatch caused by an oil boom. The model follows the line taken in essays on the Dutch Disease, and is an extension of these essays which goes on to incorporate the effect of foreign indebtedness. In mathematical terms, a specific dynamic system called ''slow-fast" is developed, incorporating two different speeds of adjustment into the analysis of the macro­ economic effects of wealth deriving from the absence of externa( equilibrium.

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