Goodbye Inflation Targeting, Hello Fear of Floating? Latin America after the Global Financial Crisis
AbstractThis paper focuses on some of the macroeconomic risks that lie ahead for Latin America. The discussion is informed by my work on crises and capital flows and their macroeconomic consequences. The trends and initial conditions that allowed the region to weather the global economic storm of 2008-2009 are discussed, as is the subsequent reversal of some of those benign trends. I review the historical patterns connecting large capital inflow surges, or “capital flow bonanzas,” with the likelihood of a variety of crises—banking, currency, external default and inflation. For Latin America, in particular, large capital flow bonanzas have seldom ended well. The implications for inflation of importing (via less than fully flexible exchange rates) the expansionary policy of the “North” are discussed.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 51282.
Date of creation: Apr 2013
Date of revision:
capital inflows; appreciation; currency crises; banking crises; inflation; debt;
Find related papers by JEL classification:
- E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- F3 - International Economics - - International Finance
- F30 - International Economics - - International Finance - - - General
- G01 - Financial Economics - - General - - - Financial Crises
- N16 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Latin America; Caribbean
- N26 - Economic History - - Financial Markets and Institutions - - - Latin America; Caribbean
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-11-16 (All new papers)
- NEP-CBA-2013-11-16 (Central Banking)
- NEP-IFN-2013-11-16 (International Finance)
- NEP-LAM-2013-11-16 (Central & South America)
- NEP-MAC-2013-11-16 (Macroeconomics)
- NEP-MON-2013-11-16 (Monetary Economics)
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