Fiscal policy considerations in the design of monetary policy in Peru
AbstractWe evaluate the financial and real linkages between fiscal and monetary policy in Peru, and show that during the recent export commodity price boom, public finances supported the implementation of monetary policy. In particular, the reduction of the net public debt has translated into a greater capability by the Central Bank to sterilize its FOREX interventions. Also, an active policy to enhance the development of the local capital markets, using the issuance of public bonds denominated in local currency as a benchmark, has created the incentive to de-dollarize banking credit. On the other hand, difficulty in fine-tuning public investment around the business cycle in recent years has led to periods of a fiscal stance that does not counteract the real business cycle. This raises the question of the possibility of adopting a structural rule for the public sector balance, based on structural fundamentals.
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Bibliographic InfoPaper provided by Banco Central de Reserva del Perú in its series Working Papers with number 2012-022.
Date of creation: Nov 2012
Date of revision:
Central Bank Monetary Policy; Fiscal Policy; Macroeconomic Stabilization;
Other versions of this item:
- Renzo Rossini & Zenon Quispe & Jorge Loyola, 2012. "Fiscal policy considerations in the design of monetary policy in Peru," BIS Papers chapters, in: Bank for International Settlements (ed.), Fiscal policy, public debt and monetary policy in emerging market economies, volume 67, pages 253-267 Bank for International Settlements.
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- 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; Treasury Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-01-07 (All new papers)
- NEP-MAC-2013-01-07 (Macroeconomics)
- NEP-MON-2013-01-07 (Monetary Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Vega, Marco & Bigio, Saki & Florian, David & Llosa, Gonzalo & Miller, Shirley & Ramirez-Rondan, Nelson & Rodriguez, Donita & Salas, Jorge & Winkelried, Diego, 2009. "Un modelo semiestructural de proyección para la economía peruana," Revista Estudios Económicos, Banco Central de Reserva del Perú, issue 17, pages 51-83.
- Renzo Rossini & Zenon Quispe & Donita Rodriguez, 2011.
"Capital flows, monetary policy and forex intervention in Peru,"
BIS Papers chapters,
in: Bank for International Settlements (ed.), Capital flows, commodity price movements and foreign exchange intervention, volume 57, pages 261-274
Bank for International Settlements.
- Rossini, Renzo & Quispe, Zenon & Rodriguez, Donita, 2011. "Capital Flows, Monetary Policy and FOREX Interventions in Peru," Working Papers 2011-008, Banco Central de Reserva del Perú.
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