This paper shows that, in spite of a reasonably sized fiscal stimulus package, Costa Rica’s economy continues on a downward path, partly because fiscal policy is being offset by a tightening of monetary policy. The paper notes that the International Monetary Fund has insisted that Costa Rica’s monetary policy remain tight due to worries over inflation targets and a perceived risk of a balance of payments crisis. However, the author notes that the IMF could help prevent a balance of payments crisis through the provision of a credit line of foreign currency, as it has done, for example, in Mexico – a vastly larger economy. The paper also examines the government’s macroeconomic policies in recent years, prior to the world recession, to see what alternative policies might have done better.
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Paper provided by Center for Economic and Policy Research (CEPR) in its series CEPR Reports and Issue Briefs with number
2009-23.
Length: 14 pages Date of creation: Jul 2009 Date of revision: Handle: RePEc:epo:papers:2009-23
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Find related papers by JEL classification: O - Economic Development, Technological Change, and Growth O5 - Economic Development, Technological Change, and Growth - - Economywide Country Studies O54 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean E - Macroeconomics and Monetary Economics E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization F - International Economics F3 - International Economics - - International Finance F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions F34 - International Economics - - International Finance - - - International Lending and Debt Problems
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