Macroeconomic trends in Paraguay from 1989 to 1997: Consumption bubble and financial crisis

This article looks at macroeconomic trends in Paraguay since 1989: a critical date, because it marks the return to democracy and a move towards liberalization of the economy. The stabilization process embarked upon at that time resulted in favourable evolution of the monetary variables, but not of investment or of growth of the product. The combination of heavy inflows of capital and an excessive increase in aggregate demand gave rise to a growing external imbalance reflected in a domestic consumption bubble.