Can Emerging Market Central Banks Bail Out Banks? A+L4848 Cautionary Tale From Latin America
AbstractThis paper investigates whether developing and emerging market countries can implement monetary policies similar to those used by advanced countries during the recent global crisis - injecting significant amounts of money into the financial system without facing major short-run adverse macroeconomic repercussions. Using panel data techniques, the paper analyzes episodes of financial turmoil in 16 Latin America during 1995-2007. The results show that developing and emerging market countries should be cautious because injecting money on a large scale into the financial system may fuel further macroeconomic instability, increasing the chances of simultaneous currency crises.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 11/258.
Date of creation: 01 Nov 2011
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-12-19 (All new papers)
- NEP-BAN-2011-12-19 (Banking)
- NEP-CBA-2011-12-19 (Central Banking)
- NEP-LAM-2011-12-19 (Central & South America)
- NEP-MAC-2011-12-19 (Macroeconomics)
- NEP-MON-2011-12-19 (Monetary Economics)
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