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Capital Flows And Destabilizing Policy In Latin America

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  • Jose Ricardo da Costa e Silva
  • Ryan A. Compton

Abstract

Motivated by the excessive macroeconomic volatility experienced in Latin America, we examine the possible contribution of monetary and fiscal policies to this outcome. In contrast with previous literature, we consider the possible simultaneity between policy and GDP growth by using GMM VAR econometric techniques. Additionally, we explore the direct impact international capital inflows have on these policies. Our evidence suggests that for the group of countries we consider, most practice destabilizing fiscal and monetary policy, and capital inflow consistently influences policy in a pro-cyclical direction.

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Bibliographic Info

Paper provided by ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics] in its series Anais do XXXIV Encontro Nacional de Economia [Proceedings of the 34th Brazilian Economics Meeting] with number 12.

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Date of creation: 2006
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Handle: RePEc:anp:en2006:12

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  10. César Calderón & Klaus Schmidt-Hebbel, 2003. "Macroeconomic Policies and Performance in Latin America," Working Papers Central Bank of Chile 217, Central Bank of Chile.
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  13. repec:fth:harver:1435 is not listed on IDEAS
  14. Fernando J. Cardim De Carvalho, 2001. "The IMF as Crisis Manager: An Assessment of the Strategy in Asia and of Its Criticisms," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 23(2), pages 235-266, January.
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Cited by:
  1. Nan Li, 2008. "Cyclical Wage Movements in Emerging Markets Compared to Developed Economies: the Role of Interest Rates," 2008 Meeting Papers 438, Society for Economic Dynamics.
  2. Nan Li, 2007. "Cyclical Wage Movements in Emerging Markets Compared to Developed Economies: A Contractual Approach," Discussion Papers 06-026, Stanford Institute for Economic Policy Research.

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