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The Legacy of the Crisis: Policy Options in a Favorable Environment

Author

Listed:
  • LaGarda, Guillermo
  • Manzano, Osmel
  • Prat, Jordi

Abstract

The region comprising Central America, Panama and Dominican Republic is on path towards a favorable economic environment, characterized by higher growth in the United States (its main trade partner), lower oil prices, and still low financing costs. This environment represents a window of opportunity for the region to overcome the vulnerabilities inherited from the financial crisis and assure long-term growth. The first legacy of the crisis has been higher public debt, which in turn raised risks of deteriorating credit quality. The second legacy involves higher external flows, which had lead to greater financial complexity and created new channels of contagion. This report identifies risks and lays forward guidelines to mitigate them. In addition, it further illustrates how a deterioration in the external environment can generate lower growth prospects for the region, emphasizing the importance of advancing with the aforementioned reforms. - See more at: https://publications.iadb.org/handle/11319/6821#sthash.6zIWwBoC.dpuf

Suggested Citation

  • LaGarda, Guillermo & Manzano, Osmel & Prat, Jordi, 2015. "The Legacy of the Crisis: Policy Options in a Favorable Environment," MPRA Paper 72151, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:72151
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    File URL: https://mpra.ub.uni-muenchen.de/72151/1/MPRA_paper_72151.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    public debt; creditworthiness; economic fundamentals; structural reforms; debt tolerance; fiscal space; financing flows; networks; financial complexity; concentration of flows; contagion; macroprudential regulation; oil prices; growth.;
    All these keywords.

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions
    • F3 - International Economics - - International Finance
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • G2 - Financial Economics - - Financial Institutions and Services
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

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