Monetary Policy Strategies for Latin America
The authors examine possible monetary policy strategies for Latin America that may help lock in the gains the region attained in the fight against inflation in the 1990s. Instead of focusing the debate about the conduct of monetary policy on whethe...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2001/10/1614835/monetary-policy-strategies-latin-america http://hdl.handle.net/10986/19530 |
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okr-10986-19530 |
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| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACCOUNTABILITY ADJUSTMENT MECHANISM ADVERSE EFFECTS AGGREGATE DEMAND AGGREGATE DEMAND CURVE AGGREGATE SUPPLY AGGREGATE SUPPLY CURVE ASYMMETRIC INFORMATION BANK DEPOSITS BANK OF ENGLAND BANK PANICS BANK RUNS BANKING LAW BANKING SUPERVISION BANKING SYSTEM BENCHMARK BONDS CAPITAL FLIGHT CAPITAL MARKETS CAPITAL MOBILITY CENTRAL BANK CENTRAL BANK LENDING CENTRAL BANKS COMPETITIVENESS CURRENCY BOARD CURRENCY BOARDS CURRENCY RISK DEVALUATION DISCOUNT RATE DISCRETIONARY MONETARY POLICY DISINFLATION DOMESTIC ECONOMY DOMESTIC INTEREST RATES DOMESTIC PRICES ECONOMIC ACTIVITY ECONOMIC CONDITIONS ECONOMIC RESEARCH ECONOMICS EMERGING ECONOMIES EMERGING MARKET ECONOMIES EUROPEAN CENTRAL BANK EXCHANGE RATE DEPRECIATION EXCHANGE RATES EXPANSIONARY MONETARY POLICY EXPECTED VALUE EXTERNAL SHOCKS FINANCIAL CRISIS FINANCIAL DEEPENING FINANCIAL INTEGRATION FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SYSTEM FINANCIAL SYSTEMS FISCAL DEFICITS FISCAL DISCIPLINE FISCAL POLICIES FIXED EXCHANGE RATE FORECASTS FOREIGN BANKS FOREIGN CURRENCY FOREIGN INTEREST RATES FOREIGN SHOCKS GROWTH RATES HIGH INFLATION INDUSTRIAL COUNTRIES INFLATION RATE INFLATION RATES INFLATION STABILIZATION INFLATION TARGETING INFLATION TARGETS INTEREST RATES INTERNATIONAL MONETARY FUND INTERNATIONAL RESERVES ITC LENDER OF LAST RESORT LENDERS OF LAST RESORT LIQUIDATION LIQUIDITY LOW INTEREST RATES MONETARY AGGREGATES MONETARY AUTHORITIES MONETARY POLICY MONETARY REGIME MONETARY STABILITY MONETARY TARGETING MONEY BASE MONEY DEMAND MONEY GROWTH RATES MONEY SUPPLY NET WORTH NOMINAL ANCHOR NOMINAL EXCHANGE RATE NOMINAL INCOME NOMINAL INTEREST RATE OFFSHORE BANKING OPEN ECONOMIES OPEN MARKETS OUTPUT GROWTH OUTPUT VOLATILITY PENALTIES POLICY INSTRUMENTS POLICY RESEARCH POTENTIAL OUTPUT PRICE STABILITY PRIVATE SECTOR PRIVATIZATION PROTECTIONISM RATE OF INFLATION REAL GDP REAL OUTPUT RESERVE REQUIREMENTS RISK PREMIUM SLOW GROWTH SMALL BANKS SOFT PEGS STABILIZATION PROGRAM TRADABLE GOODS TRANSPARENCY UNEMPLOYMENT UNEMPLOYMENT RATE |
| spellingShingle |
ACCOUNTABILITY ADJUSTMENT MECHANISM ADVERSE EFFECTS AGGREGATE DEMAND AGGREGATE DEMAND CURVE AGGREGATE SUPPLY AGGREGATE SUPPLY CURVE ASYMMETRIC INFORMATION BANK DEPOSITS BANK OF ENGLAND BANK PANICS BANK RUNS BANKING LAW BANKING SUPERVISION BANKING SYSTEM BENCHMARK BONDS CAPITAL FLIGHT CAPITAL MARKETS CAPITAL MOBILITY CENTRAL BANK CENTRAL BANK LENDING CENTRAL BANKS COMPETITIVENESS CURRENCY BOARD CURRENCY BOARDS CURRENCY RISK DEVALUATION DISCOUNT RATE DISCRETIONARY MONETARY POLICY DISINFLATION DOMESTIC ECONOMY DOMESTIC INTEREST RATES DOMESTIC PRICES ECONOMIC ACTIVITY ECONOMIC CONDITIONS ECONOMIC RESEARCH ECONOMICS EMERGING ECONOMIES EMERGING MARKET ECONOMIES EUROPEAN CENTRAL BANK EXCHANGE RATE DEPRECIATION EXCHANGE RATES EXPANSIONARY MONETARY POLICY EXPECTED VALUE EXTERNAL SHOCKS FINANCIAL CRISIS FINANCIAL DEEPENING FINANCIAL INTEGRATION FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SYSTEM FINANCIAL SYSTEMS FISCAL DEFICITS FISCAL DISCIPLINE FISCAL POLICIES FIXED EXCHANGE RATE FORECASTS FOREIGN BANKS FOREIGN CURRENCY FOREIGN INTEREST RATES FOREIGN SHOCKS GROWTH RATES HIGH INFLATION INDUSTRIAL COUNTRIES INFLATION RATE INFLATION RATES INFLATION STABILIZATION INFLATION TARGETING INFLATION TARGETS INTEREST RATES INTERNATIONAL MONETARY FUND INTERNATIONAL RESERVES ITC LENDER OF LAST RESORT LENDERS OF LAST RESORT LIQUIDATION LIQUIDITY LOW INTEREST RATES MONETARY AGGREGATES MONETARY AUTHORITIES MONETARY POLICY MONETARY REGIME MONETARY STABILITY MONETARY TARGETING MONEY BASE MONEY DEMAND MONEY GROWTH RATES MONEY SUPPLY NET WORTH NOMINAL ANCHOR NOMINAL EXCHANGE RATE NOMINAL INCOME NOMINAL INTEREST RATE OFFSHORE BANKING OPEN ECONOMIES OPEN MARKETS OUTPUT GROWTH OUTPUT VOLATILITY PENALTIES POLICY INSTRUMENTS POLICY RESEARCH POTENTIAL OUTPUT PRICE STABILITY PRIVATE SECTOR PRIVATIZATION PROTECTIONISM RATE OF INFLATION REAL GDP REAL OUTPUT RESERVE REQUIREMENTS RISK PREMIUM SLOW GROWTH SMALL BANKS SOFT PEGS STABILIZATION PROGRAM TRADABLE GOODS TRANSPARENCY UNEMPLOYMENT UNEMPLOYMENT RATE Mishkin, Frederic S. Savastano, Miguel A. Monetary Policy Strategies for Latin America |
| geographic_facet |
Latin America & Caribbean |
| relation |
Policy Research Working Paper;No. 2685 |
| description |
The authors examine possible monetary
policy strategies for Latin America that may help lock in
the gains the region attained in the fight against inflation
in the 1990s. Instead of focusing the debate about the
conduct of monetary policy on whether the nominal exchange
rate should be fixed or flexible, the focus should be on
whether the monetary policy regime appropriately constrains
discretion in monetary policymaking. Three basic frameworks
deserve serious discussion as possible long-run strategies
for monetary policy in Latin America. The authors examine
the advantages and disadvantages of a hard exchange-rate
peg, monetary targeting, and inflation targeting, in light
of monetary policy's recent track record in several
Latin American countries, looking for clues about which of
the strategies might be best suited to economies in the
region. The answer: It depends on the country's
institutional environment. Some countries appear not to have
the institutions to constrain monetary policy if discretion
is allowed. In those countries, there is a strong argument
for hard pegs, including full dollarization, that allow
little or no discretion to monetary authorities. In
countries such as Chile, which can constrain discretion,
inflation targeting is likely to produce a monetary policy
that keeps inflation low yet appropriately copes with
domestic and foreign shocks. Monetary targeting as a
strategy for Latin America is not viable because of the
likely instability of the relationship between inflation and
monetary aggregates, of which there is ample international
evidence. No monetary strategy can solve the basic problems
that have existed in Latin American economies for a long
time. The authors welcome the recent move in Latin American
countries toward inflation targeting, but say no policy will
succeed unless government policies also create the right
institutional environment. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Mishkin, Frederic S. Savastano, Miguel A. |
| author_facet |
Mishkin, Frederic S. Savastano, Miguel A. |
| author_sort |
Mishkin, Frederic S. |
| title |
Monetary Policy Strategies for Latin America |
| title_short |
Monetary Policy Strategies for Latin America |
| title_full |
Monetary Policy Strategies for Latin America |
| title_fullStr |
Monetary Policy Strategies for Latin America |
| title_full_unstemmed |
Monetary Policy Strategies for Latin America |
| title_sort |
monetary policy strategies for latin america |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2001/10/1614835/monetary-policy-strategies-latin-america http://hdl.handle.net/10986/19530 |
| _version_ |
1764439945517203456 |
| spelling |
okr-10986-195302021-04-23T14:03:43Z Monetary Policy Strategies for Latin America Mishkin, Frederic S. Savastano, Miguel A. ACCOUNTABILITY ADJUSTMENT MECHANISM ADVERSE EFFECTS AGGREGATE DEMAND AGGREGATE DEMAND CURVE AGGREGATE SUPPLY AGGREGATE SUPPLY CURVE ASYMMETRIC INFORMATION BANK DEPOSITS BANK OF ENGLAND BANK PANICS BANK RUNS BANKING LAW BANKING SUPERVISION BANKING SYSTEM BENCHMARK BONDS CAPITAL FLIGHT CAPITAL MARKETS CAPITAL MOBILITY CENTRAL BANK CENTRAL BANK LENDING CENTRAL BANKS COMPETITIVENESS CURRENCY BOARD CURRENCY BOARDS CURRENCY RISK DEVALUATION DISCOUNT RATE DISCRETIONARY MONETARY POLICY DISINFLATION DOMESTIC ECONOMY DOMESTIC INTEREST RATES DOMESTIC PRICES ECONOMIC ACTIVITY ECONOMIC CONDITIONS ECONOMIC RESEARCH ECONOMICS EMERGING ECONOMIES EMERGING MARKET ECONOMIES EUROPEAN CENTRAL BANK EXCHANGE RATE DEPRECIATION EXCHANGE RATES EXPANSIONARY MONETARY POLICY EXPECTED VALUE EXTERNAL SHOCKS FINANCIAL CRISIS FINANCIAL DEEPENING FINANCIAL INTEGRATION FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SYSTEM FINANCIAL SYSTEMS FISCAL DEFICITS FISCAL DISCIPLINE FISCAL POLICIES FIXED EXCHANGE RATE FORECASTS FOREIGN BANKS FOREIGN CURRENCY FOREIGN INTEREST RATES FOREIGN SHOCKS GROWTH RATES HIGH INFLATION INDUSTRIAL COUNTRIES INFLATION RATE INFLATION RATES INFLATION STABILIZATION INFLATION TARGETING INFLATION TARGETS INTEREST RATES INTERNATIONAL MONETARY FUND INTERNATIONAL RESERVES ITC LENDER OF LAST RESORT LENDERS OF LAST RESORT LIQUIDATION LIQUIDITY LOW INTEREST RATES MONETARY AGGREGATES MONETARY AUTHORITIES MONETARY POLICY MONETARY REGIME MONETARY STABILITY MONETARY TARGETING MONEY BASE MONEY DEMAND MONEY GROWTH RATES MONEY SUPPLY NET WORTH NOMINAL ANCHOR NOMINAL EXCHANGE RATE NOMINAL INCOME NOMINAL INTEREST RATE OFFSHORE BANKING OPEN ECONOMIES OPEN MARKETS OUTPUT GROWTH OUTPUT VOLATILITY PENALTIES POLICY INSTRUMENTS POLICY RESEARCH POTENTIAL OUTPUT PRICE STABILITY PRIVATE SECTOR PRIVATIZATION PROTECTIONISM RATE OF INFLATION REAL GDP REAL OUTPUT RESERVE REQUIREMENTS RISK PREMIUM SLOW GROWTH SMALL BANKS SOFT PEGS STABILIZATION PROGRAM TRADABLE GOODS TRANSPARENCY UNEMPLOYMENT UNEMPLOYMENT RATE The authors examine possible monetary policy strategies for Latin America that may help lock in the gains the region attained in the fight against inflation in the 1990s. Instead of focusing the debate about the conduct of monetary policy on whether the nominal exchange rate should be fixed or flexible, the focus should be on whether the monetary policy regime appropriately constrains discretion in monetary policymaking. Three basic frameworks deserve serious discussion as possible long-run strategies for monetary policy in Latin America. The authors examine the advantages and disadvantages of a hard exchange-rate peg, monetary targeting, and inflation targeting, in light of monetary policy's recent track record in several Latin American countries, looking for clues about which of the strategies might be best suited to economies in the region. The answer: It depends on the country's institutional environment. Some countries appear not to have the institutions to constrain monetary policy if discretion is allowed. In those countries, there is a strong argument for hard pegs, including full dollarization, that allow little or no discretion to monetary authorities. In countries such as Chile, which can constrain discretion, inflation targeting is likely to produce a monetary policy that keeps inflation low yet appropriately copes with domestic and foreign shocks. Monetary targeting as a strategy for Latin America is not viable because of the likely instability of the relationship between inflation and monetary aggregates, of which there is ample international evidence. No monetary strategy can solve the basic problems that have existed in Latin American economies for a long time. The authors welcome the recent move in Latin American countries toward inflation targeting, but say no policy will succeed unless government policies also create the right institutional environment. 2014-08-20T20:52:58Z 2014-08-20T20:52:58Z 2001-10 http://documents.worldbank.org/curated/en/2001/10/1614835/monetary-policy-strategies-latin-america http://hdl.handle.net/10986/19530 English en_US Policy Research Working Paper;No. 2685 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Latin America & Caribbean |