Publication:
Monetary Policy Strategies for Latin America

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dc.contributor.authorMishkin, Frederic S.
dc.contributor.authorSavastano, Miguel A.
dc.date.accessioned2014-08-20T20:52:58Z
dc.date.available2014-08-20T20:52:58Z
dc.date.issued2001-10
dc.description.abstractThe 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.en
dc.identifierhttp://documents.worldbank.org/curated/en/2001/10/1614835/monetary-policy-strategies-latin-america
dc.identifier.doi10.1596/1813-9450-2685
dc.identifier.urihttps://hdl.handle.net/10986/19530
dc.languageEnglish
dc.language.isoen_US
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper;No. 2685
dc.rightsCC BY 3.0 IGO
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectACCOUNTABILITY
dc.subjectADJUSTMENT MECHANISM
dc.subjectADVERSE EFFECTS
dc.subjectAGGREGATE DEMAND
dc.subjectAGGREGATE DEMAND CURVE
dc.subjectAGGREGATE SUPPLY
dc.subjectAGGREGATE SUPPLY CURVE
dc.subjectASYMMETRIC INFORMATION
dc.subjectBANK DEPOSITS
dc.subjectBANK OF ENGLAND
dc.subjectBANK PANICS
dc.subjectBANK RUNS
dc.subjectBANKING LAW
dc.subjectBANKING SUPERVISION
dc.subjectBANKING SYSTEM
dc.subjectBENCHMARK
dc.subjectBONDS
dc.subjectCAPITAL FLIGHT
dc.subjectCAPITAL MARKETS
dc.subjectCAPITAL MOBILITY
dc.subjectCENTRAL BANK
dc.subjectCENTRAL BANK LENDING
dc.subjectCENTRAL BANKS
dc.subjectCOMPETITIVENESS
dc.subjectCURRENCY BOARD
dc.subjectCURRENCY BOARDS
dc.subjectCURRENCY RISK
dc.subjectDEVALUATION
dc.subjectDISCOUNT RATE
dc.subjectDISCRETIONARY MONETARY POLICY
dc.subjectDISINFLATION
dc.subjectDOMESTIC ECONOMY
dc.subjectDOMESTIC INTEREST RATES
dc.subjectDOMESTIC PRICES
dc.subjectECONOMIC ACTIVITY
dc.subjectECONOMIC CONDITIONS
dc.subjectECONOMIC RESEARCH
dc.subjectECONOMICS
dc.subjectEMERGING ECONOMIES
dc.subjectEMERGING MARKET ECONOMIES
dc.subjectEUROPEAN CENTRAL BANK
dc.subjectEXCHANGE RATE DEPRECIATION
dc.subjectEXCHANGE RATES
dc.subjectEXPANSIONARY MONETARY POLICY
dc.subjectEXPECTED VALUE
dc.subjectEXTERNAL SHOCKS
dc.subjectFINANCIAL CRISIS
dc.subjectFINANCIAL DEEPENING
dc.subjectFINANCIAL INTEGRATION
dc.subjectFINANCIAL MARKETS
dc.subjectFINANCIAL SECTOR
dc.subjectFINANCIAL SYSTEM
dc.subjectFINANCIAL SYSTEMS
dc.subjectFISCAL DEFICITS
dc.subjectFISCAL DISCIPLINE
dc.subjectFISCAL POLICIES
dc.subjectFIXED EXCHANGE RATE
dc.subjectFORECASTS
dc.subjectFOREIGN BANKS
dc.subjectFOREIGN CURRENCY
dc.subjectFOREIGN INTEREST RATES
dc.subjectFOREIGN SHOCKS
dc.subjectGROWTH RATES
dc.subjectHIGH INFLATION
dc.subjectINDUSTRIAL COUNTRIES
dc.subjectINFLATION RATE
dc.subjectINFLATION RATES
dc.subjectINFLATION STABILIZATION
dc.subjectINFLATION TARGETING
dc.subjectINFLATION TARGETS
dc.subjectINTEREST RATES
dc.subjectINTERNATIONAL MONETARY FUND
dc.subjectINTERNATIONAL RESERVES
dc.subjectITC
dc.subjectLENDER OF LAST RESORT
dc.subjectLENDERS OF LAST RESORT
dc.subjectLIQUIDATION
dc.subjectLIQUIDITY
dc.subjectLOW INTEREST RATES
dc.subjectMONETARY AGGREGATES
dc.subjectMONETARY AUTHORITIES
dc.subjectMONETARY POLICY
dc.subjectMONETARY REGIME
dc.subjectMONETARY STABILITY
dc.subjectMONETARY TARGETING
dc.subjectMONEY BASE
dc.subjectMONEY DEMAND
dc.subjectMONEY GROWTH RATES
dc.subjectMONEY SUPPLY
dc.subjectNET WORTH
dc.subjectNOMINAL ANCHOR
dc.subjectNOMINAL EXCHANGE RATE
dc.subjectNOMINAL INCOME
dc.subjectNOMINAL INTEREST RATE
dc.subjectOFFSHORE BANKING
dc.subjectOPEN ECONOMIES
dc.subjectOPEN MARKETS
dc.subjectOUTPUT GROWTH
dc.subjectOUTPUT VOLATILITY
dc.subjectPENALTIES
dc.subjectPOLICY INSTRUMENTS
dc.subjectPOLICY RESEARCH
dc.subjectPOTENTIAL OUTPUT
dc.subjectPRICE STABILITY
dc.subjectPRIVATE SECTOR
dc.subjectPRIVATIZATION
dc.subjectPROTECTIONISM
dc.subjectRATE OF INFLATION
dc.subjectREAL GDP
dc.subjectREAL OUTPUT
dc.subjectRESERVE REQUIREMENTS
dc.subjectRISK PREMIUM
dc.subjectSLOW GROWTH
dc.subjectSMALL BANKS
dc.subjectSOFT PEGS
dc.subjectSTABILIZATION PROGRAM
dc.subjectTRADABLE GOODS
dc.subjectTRANSPARENCY
dc.subjectUNEMPLOYMENT
dc.subjectUNEMPLOYMENT RATE
dc.titleMonetary Policy Strategies for Latin Americaen
dspace.entity.typePublication
okr.crossref.titleMonetary Policy Strategies for Latin America
okr.date.disclosure2001-10-31
okr.date.doiregistration2025-04-10T09:28:20.721905Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2001/10/1614835/monetary-policy-strategies-latin-america
okr.globalpracticeMacroeconomics and Fiscal Management
okr.globalpracticeFinance and Markets
okr.guid752991468753288831
okr.identifier.doi10.1596/1813-9450-2685
okr.identifier.externaldocumentum000094946_01101604055756
okr.identifier.internaldocumentum1614835
okr.identifier.reportWPS2685
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2001/10/27/000094946_01101604055756/Rendered/PDF/multi0page.pdfen
okr.region.administrativeLatin America and Caribbean
okr.sectorPublic Financial Management
okr.sectorPublic Administration, Law, and Justice
okr.topicEconomic Theory and Research
okr.topicBanks and Banking Reform
okr.topicFinance and Financial Sector Development::Financial Intermediation
okr.topicPayment Systems and Infrastructure
okr.topicMacroeconomics and Economic Growth::Macroeconomic Management
okr.topicMacroeconomics and Economic Growth::Economic Stabilization
okr.topicFiscal and Monetary Policy
okr.unitFinancial Sector Strategy and Policy Department
okr.volume1
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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