IDEAS home Printed from https://ideas.repec.org/p/imf/imfwpa/2013-259.html
   My bibliography  Save this paper

Resilience in Latin America: Lessons from Macroeconomic Management and Financial Policies

Author

Listed:
  • Mr. Jose De Gregorio

Abstract

This paper analyzes the unprecedented resilience of Latin American countries to the global financial crisis. It argues that sound macroeconomic conditions, which allowed an unusual monetary and fiscal expansion, exchange rate flexibility, a strong and well--regulated financial system, high level of reserves, and a bit of luck coming from very high terms of trade, were central to good economic performance. Persevering along the road of strong macroeconomic and financial policies is necessary, but not sufficient, to go from recovery to sustained growth.

Suggested Citation

  • Mr. Jose De Gregorio, 2013. "Resilience in Latin America: Lessons from Macroeconomic Management and Financial Policies," IMF Working Papers 2013/259, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2013/259
    as

    Download full text from publisher

    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=41161
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Frankel, Jeffrey A. & Vegh, Carlos A. & Vuletin, Guillermo, 2013. "On graduation from fiscal procyclicality," Journal of Development Economics, Elsevier, vol. 100(1), pages 32-47.
    2. Jose De Gregorio & Andrea Tokman R., 2004. "Overcoming Fear of Floating: Exchange Rate Policies in Chile," Working Papers Central Bank of Chile 302, Central Bank of Chile.
    3. Kulwant Rai & Herman Kamil, 2010. "The Global Credit Crunch and Foreign Banks’ Lending to Emerging Markets: Why Did Latin America Fare Better?," IMF Working Papers 2010/102, International Monetary Fund.
    4. Nicolas E. Magud & Carmen M. Reinhart & Kenneth S. Rogoff, 2018. "Capital Controls: Myth and Reality--A Portfolio Balance Approach," Annals of Economics and Finance, Society for AEF, vol. 19(1), pages 1-47, May.
    5. Pierre-Olivier Gourinchas & Maurice Obstfeld, 2012. "Stories of the Twentieth Century for the Twenty-First," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(1), pages 226-265, January.
    6. Joshua Aizenman & Jaewoo Lee, 2007. "International Reserves: Precautionary Versus Mercantilist Views, Theory and Evidence," Open Economies Review, Springer, vol. 18(2), pages 191-214, April.
    7. Jean Arcand & Enrico Berkes & Ugo Panizza, 2015. "Too much finance?," Journal of Economic Growth, Springer, vol. 20(2), pages 105-148, June.
    8. Kevin Cowan & Erwin Hansen & Luis Oscar Herrera, 2005. "Currency Mismatches, Balance-Sheet Effects and Hedging in Chilean Non-Financial Corporations," Research Department Publications 4387, Inter-American Development Bank, Research Department.
    9. Mr. Irineu E de Carvalho Filho, 2010. "Inflation Targeting and the Crisis: An Empirical Assessment," IMF Working Papers 2010/045, International Monetary Fund.
    10. Stephen Cecchetti & Enisse Kharroubi, 2012. "Reassessing the impact of finance on growth," BIS Working Papers 381, Bank for International Settlements.
    11. Marcus Miller & Paul Weller & Lei Zhang, 2002. "Moral Hazard and the US Stock Market: Analysing the "Greenspan Put"," Economic Journal, Royal Economic Society, vol. 112(478), pages 171-186, March.
    12. Kevin Cowan & José De Gregorio, 2007. "International Borrowing, Capital Controls, and the Exchange Rate: Lessons from Chile," NBER Chapters, in: Capital Controls and Capital Flows in Emerging Economies: Policies, Practices, and Consequences, pages 241-296, National Bureau of Economic Research, Inc.
    13. Patrick A. Imam & Erlend Nier & Mr. Luis Ignacio Jácome, 2012. "Building Blocks for Effective Macroprudential Policies in Latin America: Institutional Considerations," IMF Working Papers 2012/183, International Monetary Fund.
    14. Nicolas Magud & Carmen Reinhart & Kenneth Rogoff, 2005. "Capital Controls: Myth and Reality A Portfolio Balance Approach to Capital Controls," University of Oregon Economics Department Working Papers 2006-10, University of Oregon Economics Department.
    15. Diaz-Alejandro, Carlos, 1985. "Good-bye financial repression, hello financial crash," Journal of Development Economics, Elsevier, vol. 19(1-2), pages 1-24.
    16. Mr. Joshua Aizenman & Mr. Jaewoo Lee, 2005. "International Reserves: Precautionary vs. Mercantilist Views, Theory and Evidence," IMF Working Papers 2005/198, International Monetary Fund.
    17. Jeffrey A. Frankel & George Saravelos, 2010. "Are Leading Indicators of Financial Crises Useful for Assessing Country Vulnerability? Evidence from the 2008-09 Global Crisis," NBER Working Papers 16047, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Stijn Claessens & M. Ayhan Kose & Luc Laeven & Fabián Valencia, 2013. "Understanding Financial Crises: Causes, Consequences, and Policy Responses," Koç University-TUSIAD Economic Research Forum Working Papers 1301, Koc University-TUSIAD Economic Research Forum.
    2. Brei, Michael & Buzaushina, Almira, 2015. "International financial shocks in emerging markets," Journal of International Money and Finance, Elsevier, vol. 58(C), pages 51-74.
    3. Stijn Claessens & M. Ayhan Kose, 2013. "Financial Crises: Explanations, Types and Implications," CAMA Working Papers 2013-06, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    4. Escobari, Diego & Garcia, Sergio & Mellado, Cristhian, 2017. "Identifying bubbles in Latin American equity markets: Phillips-Perron-based tests and linkages," Emerging Markets Review, Elsevier, vol. 33(C), pages 90-101.
    5. Juan Carlos Moreno-Brid & Stefanie Garry, 2016. "Economic performance in Latin America in the 2000s: recession, recovery, and resilience?," Oxford Development Studies, Taylor & Francis Journals, vol. 44(4), pages 384-400, October.
    6. Tatiana Cesaroni & Roberta De Santis, 2018. "Dynamics of net foreign asset components in the EMU," International Economics, CEPII research center, issue 156, pages 268-283.
    7. Herrero, Alicia Garcia, 2021. "Why Are Latin American Crises Deeper Than Those in Emerging Asia, Including That of COVID-19?," ADBI Working Papers 1221, Asian Development Bank Institute.
    8. Pagliacci, Carolina, 2014. "Latin American Performance to External Shocks: What Has Really Been Sweat?," MPRA Paper 57816, University Library of Munich, Germany.
    9. De Gregorio, José, 2015. "Sobre entradas y salidas de capitales: flujos brutos, netos y política económica," Revista Estudios Económicos, Banco Central de Reserva del Perú, issue 2, pages 9-24.
    10. Luis Arturo Bárcenas & Lorena Barreiro & Carolina Pagliacci, 2016. "What Is the Role of Size in Latin American Banks’ Performancein Response to External Shocks?," Monetaria, Centro de Estudios Monetarios Latinoamericanos, CEMLA, vol. 0(2), pages 233-273, july-dece.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Eswar S. Prasad, 2011. "Role reversal in global finance," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 339-390.
    2. Javier Bianchi & Guido Lorenzoni, 2021. "The Prudential Use of Capital Controls and Foreign Currency Reserves," Working Papers 787, Federal Reserve Bank of Minneapolis.
    3. Marcel Fratzscher, 2014. "Capital Controls and Foreign Exchange Policy," Central Banking, Analysis, and Economic Policies Book Series, in: Miguel Fuentes D. & Claudio E. Raddatz & Carmen M. Reinhart (ed.),Capital Mobility and Monetary Policy, edition 1, volume 18, chapter 7, pages 205-253, Central Bank of Chile.
    4. J. Ramos-Tallada., 2013. "The IMF and management of capital flows: the long road towards a pragmatic approach," Quarterly selection of articles - Bulletin de la Banque de France, Banque de France, issue 31, pages 63-85, Autumn.
    5. José De Gregorio, 2012. "Los Flujos de Capital y la Interacción entre la Política Macroprudencial y la Política Monetaria," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 15(1), pages 90-95, April.
    6. Sebastián Fanelli & Ludwig Straub, 2021. "A Theory of Foreign Exchange Interventions [The Cost of Foreign Exchange Intervention: Concepts and Measurement]," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 88(6), pages 2857-2885.
    7. Jérôme Creel & Paul Hubert & Fabien Labondance, 2023. "Credit, banking fragility, and economic performance," Oxford Economic Papers, Oxford University Press, vol. 75(2), pages 553-573.
    8. Carmen M. Reinhart & Takeshi Tashiro, 2013. "Crowding out redefined: the role of reserve accumulation," Proceedings, Federal Reserve Bank of San Francisco, issue Nov, pages 1-43.
    9. Asli Demirgüç-Kunt & Luis Servén, 2010. "Are All the Sacred Cows Dead? Implications of the Financial Crisis for Macro- and Financial Policies," The World Bank Research Observer, World Bank, vol. 25(1), pages 91-124, February.
    10. Javier Bianchi & Juan Carlos Hatchondo & Leonardo Martinez, 2018. "International Reserves and Rollover Risk," American Economic Review, American Economic Association, vol. 108(9), pages 2629-2670, September.
    11. Gianluca Benigno & Luca Fornaro, 2014. "The Financial Resource Curse," Scandinavian Journal of Economics, Wiley Blackwell, vol. 116(1), pages 58-86, January.
    12. Cheng, Gong, 2015. "Balance sheet effects, foreign reserves and public policies," Journal of International Money and Finance, Elsevier, vol. 59(C), pages 146-165.
    13. Jean Pierre Allegret, 2012. "Responses of Monetary Authorities in Emerging Economies to International Financial Crises: What Do We Really know?," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 3-32.
    14. Juan J. Echavarría & Luis F. Melo-Velandia & Mauricio Villamizar-Villegas, 2018. "The impact of pre-announced day-to-day interventions on the Colombian exchange rate," Empirical Economics, Springer, vol. 55(3), pages 1319-1336, November.
    15. Andrea Fabiani & Martha López Piñeros & José-Luis Peydró & Paul E. Soto, 2021. "Capital controls, corporate debt and real effects," Economics Working Papers 1833, Department of Economics and Business, Universitat Pompeu Fabra.
    16. Xingwang Qian & Andreas Steiner, 2014. "International Reserves and the Composition of Foreign Equity Investment," Review of International Economics, Wiley Blackwell, vol. 22(2), pages 379-409, May.
    17. Catão, Luís A.V. & te Kaat, Daniel Marcel, 2021. "Capital account liberalization and the composition of bank liabilities," Journal of International Money and Finance, Elsevier, vol. 116(C).
    18. Ahmet Aysan & Salih Fendoglu & Mustafa Kilinc, 2014. "Managing short-term capital flows in new central banking: unconventional monetary policy framework in Turkey," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 4(1), pages 45-69, June.
    19. Gelos, Gaston & Gornicka, Lucyna & Koepke, Robin & Sahay, Ratna & Sgherri, Silvia, 2022. "Capital flows at risk: Taming the ebbs and flows," Journal of International Economics, Elsevier, vol. 134(C).
    20. Jean‐Pierre Allegret & Audrey Allegret, 2019. "Did foreign exchange holding influence growth performance during the global financial crisis?," The World Economy, Wiley Blackwell, vol. 42(3), pages 680-710, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:2013/259. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Akshay Modi (email available below). General contact details of provider: https://edirc.repec.org/data/imfffus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.