Monetary Policy Strategies for Latin America
National Bureau of Economic Research, 2000 - Anti-inflationary policies - 31 pages
The paper examines possible monetary policy strategies for Latin America that may help lock-in the gains in the fight against inflation attained by the region during the 1990s. We start by calling for a refocus of the debate about the conduct of monetary policy away from thinking that it is about whether the nominal exchange rate should be fixed or flexible. Instead we argue that the focus should be on whether the monetary policy regime appropriately constrains discretion in monetary policymaking. This focus suggest that there are three basic frameworks that deserve serious discussion as possible, long-run strategies for monetary policy in Latin America: a hard exchange-rate peg, monetary targeting, and inflation targeting. We look at the advantages and disadvantages of each of these strategies and then examine the recent track record of monetary policy in some Latin American countries for clues as to which of the three strategies might be best suited to economies in the region
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announced Annual GDP Argentina Argentine currency board Bank of Mexico bank’s banking system base money Bernanke Brazil Calvo Chile Chilean Chilean central bank Colombia conduct monetary policy conduct of monetary countries in Latin credibility currency board debate discretion disinflation domestic currency exchange rate band exchange-rate pegs external financial system fiscal deficits fiscal policy foreign exchange market full dollarization gš gš gš goal hard pegs high inflation industrialized countries inflation control inflation expectations inflation forecasts inflation objective inflation rate inflation targeting regime inflation targeting strategy inflation-targeting regimes International issue Latin America Latin American countries low inflation Mishkin monetary aggregates monetary authorities monetary base monetary policy regime monetary policy strategy NBER Working Papers nominal exchange rate outcome Panama Peru Peru's central bank peso price stability problem Real GDP growth region Savastano shocks strategy for monetary subscription success target range targets for inflation Tequila crisis transparency U.S. dollar