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U.S. Monetary Policy’s impact on Latin America’s structure of production (1960-2010)

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  • Nicolás Cachanosky

Abstract

This paper examines the effects of U.S. monetary policy on Latin America’s production structure before two economic crises, specifically the effects of monetary policy on the real economy at the industrial level. Changes in the federal funds rate produce uneven effects on output trends across sectors and industries that are more capital-intensive and involved in relatively long-term projects are more sensitive to changes in the federal funds rate. Periods of loose monetary policy result in resource misallocation that is costly to correct during a bust if investment is irreversible, with a particular pattern of economic distortion during an unsustainable boom.

Suggested Citation

  • Nicolás Cachanosky, 2015. "U.S. Monetary Policy’s impact on Latin America’s structure of production (1960-2010)," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 52(1), pages 95-116, May.
  • Handle: RePEc:ioe:cuadec:v:52:y:2015:i:1:p:95-116
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    1. LAJE: U.S. Monetary Policy’s impact on Latin America’s structure of production (1960-2010)
      by Nicolas Cachanosky in Punto de Vista Economico on 2015-05-28 21:19:24

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    Cited by:

    1. Cachanosky, Nicolás & Lewin, Peter, 2016. "An empirical application of the EVA® framework to business cycles," Review of Financial Economics, Elsevier, vol. 30(C), pages 60-67.

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    More about this item

    Keywords

    monetary policy; Latin America; international business cycles; structure of production;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles

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