Advanced Search
MyIDEAS: Login to save this article or follow this journal

The renaissance of Friedman hypothesis: nature of global financial crisis and consequences in a small open and highly dollarized economy

Contents:

Author Info

  • Pablo Mendieta Ossio

    (Banco Central de Bolivia)

Abstract

This paper analyzes the US subprime crisis from a business cycles perspective. For this purpose, it employs a macroeconomic model with endogenous financial imperfections, where central bank’s only objectives are output and inflation, using a Small Structural Macroeconometric Model (SSMM). The results show that financial frictions could generate an economic cycle through monetary policy reactions, according to old fashioned Milton Friedman’s business cycles origins hypothesis. The model is calibrated according to the American economy recent experience. It also studies the consequences of this crisis in a small open and highly dollarized country, like Bolivia. The paper concludes that in order to achieve global price stability, potential structural problems must be addressed in order to avoid non desired effects; and that policy makers must improve their ability to anticipate future evolution of the economy.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.bcb.gob.bo/webdocs/2011/Publicaciones/RevistaAnalisis/2010/vol13/capitulo4.pdf
Download Restriction: no

File URL: http://www.bcb.gob.bo/?q=node/1124
Download Restriction: no

Bibliographic Info

Article provided by Banco Central de Bolivia in its journal Revista de Análisis.

Volume (Year): 13 (2010)
Issue (Month): 1 (December)
Pages: 119-151

as in new window
Handle: RePEc:blv:journl:v:12:y:2010:i:1:p:119-151

Contact details of provider:
Postal: Casilla Postal 3118, La Paz
Phone: (591 - 02) 374151
Email:
Web page: http://www.bcb.gob.bo/
More information through EDIRC

Related research

Keywords: financial crisis; small macroeconometric models;

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Svensson, L-E-O, 1996. "Inflation Forecast Targeting : Implementaing and Monitoring Inflation Targets," Papers 615, Stockholm - International Economic Studies.
  2. Eduardo Moron & Diego Winkelried, 2002. "Monetary Policy Rules for Financially Vulnerable EconomieEd," Macroeconomics 0205001, EconWPA.
  3. Mark Gertler & Simon Gilchrist & Fabio Natalucci, 2003. "External Constraints on Monetary Policy and the Financial Accelerator," NBER Working Papers 10128, National Bureau of Economic Research, Inc.
  4. Favero, Carlo A., 2001. "Applied Macroeconometrics," OUP Catalogue, Oxford University Press, number 9780198296850, September.
  5. Richard Clarida & Jordi Gali & Mark Gertler, 1999. "The Science of Monetary Policy: A New Keynesian Perspective," NBER Working Papers 7147, National Bureau of Economic Research, Inc.
  6. Leonardo Leiderman & Rodolfo Maino & Eric Parrado, 2006. "Inflation Targeting in Dollarized Economies," IMF Working Papers 06/157, International Monetary Fund.
  7. Luis Felipe Céspedes & Roberto Chang & Andrés Velasco, 2004. "Balance Sheets and Exchange Rate Policy," American Economic Review, American Economic Association, vol. 94(4), pages 1183-1193, September.
  8. John B. Taylor, 2007. "Housing and Monetary Policy," NBER Working Papers 13682, National Bureau of Economic Research, Inc.
  9. Luque, Javier & Vega, Marco, 2003. "Usando un modelo semi-estructural de pequeña escala para hacer proyecciones: Algunas consideraciones," Revista Estudios Económicos, Banco Central de Reserva del Perú, issue 10.
  10. Douglas Laxton & Andrew Berg & Philippe D Karam, 2006. "A Practical Model-Based Approach to Monetary Policy Analysis: Overview," IMF Working Papers 06/80, International Monetary Fund.
  11. Ben Bernanke & Mark Gertler & Simon Gilchrist, 1998. "The Financial Accelerator in a Quantitative Business Cycle Framework," NBER Working Papers 6455, National Bureau of Economic Research, Inc.
  12. Eric Parrado & Luis Ignacio Jácome, 2007. "The Quest for Price Stability in Central America and the Dominican Republic," IMF Working Papers 07/54, International Monetary Fund.
  13. Calvo, Guillermo A., 1983. "Staggered prices in a utility-maximizing framework," Journal of Monetary Economics, Elsevier, vol. 12(3), pages 383-398, September.
  14. Cho, Seonghoon & Moreno, Antonio, 2006. "A Small-Sample Study of the New-Keynesian Macro Model," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 38(6), pages 1461-1481, September.
  15. Milton Friedman, 1961. "The Lag in Effect of Monetary Policy," Journal of Political Economy, University of Chicago Press, vol. 69, pages 447.
  16. Eric Parrado, 2004. "Singapore's Unique Monetary Policy," IMF Working Papers 04/10, International Monetary Fund.
  17. Rotemberg, Julio J, 1984. "A Monetary Equilibrium Model with Transactions Costs," Journal of Political Economy, University of Chicago Press, vol. 92(1), pages 40-58, February.
  18. Easterly, William, 2006. "An identity crisis? Examining IMF financial programming," World Development, Elsevier, vol. 34(6), pages 964-980, June.
  19. J. J. Polak, 1957. "Monetary Analysis of Income Formation and Payments Problems," IMF Staff Papers, Palgrave Macmillan, vol. 6(1), pages 1-50, November.
  20. International Monetary Fund, 2009. "Inflation Targeting Under Imperfect Policy Credibility," IMF Working Papers 09/94, International Monetary Fund.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:blv:journl:v:12:y:2010:i:1:p:119-151. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jose Antonio Caballero Pelaez).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.