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Monetary Policy Challenges in Latin America
This ground-breaking book analyses the severe monetary policy challenges facing Latin American countries. Contributors reflect on how these issues should be addressed by policy-makers, identifying the need for a synergic response from regional central banks.
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Critical Acclaim
Contributors
Contents
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This ground-breaking book analyses the severe monetary policy challenges facing Latin American countries. Contributors reflect on how these issues should be addressed by policy-makers, identifying the need for a synergic response from regional central banks.
Arguing that the challenges currently faced by regional central banks are intrinsically related, this book examines the risks generated by an international climate of uncertainty. It explores how to address inflationary pressures, output contraction, external vulnerabilities, tightness in advanced central banks’ monetary policies, nominal dollar appreciation, and falling commodity prices. Chapters focus on key elements of monetary policy, including transmission channels, exchange rates, international reserves, sustainable finance, and income inequality, to give an alternative view on the position of regional central banks in the global financial system.
Monetary Policy Challenges in Latin America will be an invaluable resource for students and scholars of monetary policy, development economics, banking, and political economy. It will also be essential reading for policy-makers seeking new perspectives on monetary policy.
Arguing that the challenges currently faced by regional central banks are intrinsically related, this book examines the risks generated by an international climate of uncertainty. It explores how to address inflationary pressures, output contraction, external vulnerabilities, tightness in advanced central banks’ monetary policies, nominal dollar appreciation, and falling commodity prices. Chapters focus on key elements of monetary policy, including transmission channels, exchange rates, international reserves, sustainable finance, and income inequality, to give an alternative view on the position of regional central banks in the global financial system.
Monetary Policy Challenges in Latin America will be an invaluable resource for students and scholars of monetary policy, development economics, banking, and political economy. It will also be essential reading for policy-makers seeking new perspectives on monetary policy.
Critical Acclaim
‘Monetary Policy and Challenges in Latin America manages to articulate a set of chapters around dialoguing themes, identifiable controversies, and clear messages. They address topics that have always been of interest to the research agenda of the region and require constant updating: criticism of the mainstream, study of the concrete specificities of Latin American economies, pursuit of alternative economic policies, and commitment to structurally addressing the economic and social ills imposed on the region by its peripheral position.’
– João Marcos Hausmann Tavares, Universidade Federal Fluminense, Niteroi, Brazil
‘In this significant contribution, the editors and authors identify several key analytical dimensions for monetary policy makers in Latin America, while providing a comprehensive view on how to address the main monetary challenges of our time with concrete proposals, theoretical discussions, empirical evidence and analytical rigour. An outstanding contribution which should be widely read by scholars, students and policy makers.’
– Stephany Griffith-Jones, Emeritus Professorial Fellow, Institute of Development Studies, Sussex University, UK
‘What a wonderful collection of essays on the challenges faced in Latin America. The editors have brought together an impressive list of scholars, both young and more established, to tackle difficult questions surrounding monetary policy. This book is an important step forward and must be read by all who wish to understand the complexity surrounding the economics of Latin America. Congratulations to the editors and to the authors.’
– Jose Antonio Ocampo, Professor, Columbia University, US and former United Nations Under-Secretary-General for Economic and Social Affairs and Minister of Finance of Colombia
‘This book puts together 14 excellent policy-oriented - theoretical and empirical - contributions from important post-Keynesian and Structuralist economists. It focuses on policy and institutional arrangements to manage and overcome Balance-of-Payments constraints in Latin America. A must-read for those interested in heterodox short and medium-run open economy macroeconomics.’
– Ricardo Summa, Professor of Economics, Federal University of Rio de Janeiro (UFRJ), Brazil
– João Marcos Hausmann Tavares, Universidade Federal Fluminense, Niteroi, Brazil
‘In this significant contribution, the editors and authors identify several key analytical dimensions for monetary policy makers in Latin America, while providing a comprehensive view on how to address the main monetary challenges of our time with concrete proposals, theoretical discussions, empirical evidence and analytical rigour. An outstanding contribution which should be widely read by scholars, students and policy makers.’
– Stephany Griffith-Jones, Emeritus Professorial Fellow, Institute of Development Studies, Sussex University, UK
‘What a wonderful collection of essays on the challenges faced in Latin America. The editors have brought together an impressive list of scholars, both young and more established, to tackle difficult questions surrounding monetary policy. This book is an important step forward and must be read by all who wish to understand the complexity surrounding the economics of Latin America. Congratulations to the editors and to the authors.’
– Jose Antonio Ocampo, Professor, Columbia University, US and former United Nations Under-Secretary-General for Economic and Social Affairs and Minister of Finance of Colombia
‘This book puts together 14 excellent policy-oriented - theoretical and empirical - contributions from important post-Keynesian and Structuralist economists. It focuses on policy and institutional arrangements to manage and overcome Balance-of-Payments constraints in Latin America. A must-read for those interested in heterodox short and medium-run open economy macroeconomics.’
– Ricardo Summa, Professor of Economics, Federal University of Rio de Janeiro (UFRJ), Brazil
Contributors
Contributors: Nelson Barbosa Filho, Nicolás Bertholet, Pablo G. Bortz, Esteban Pérez Caldentey, Jorge Carrera, Alfredo Schclarek Curutchet, Pablo de la Vega, Simone Deos, Gary Dymski, Enzo M. Gerioni, Annina Kaltenbrunner, Sylvio Antonio Kappes, William N. Kring, Gabriel Michelena, Gabriel Montes-Rojas, Noemi Levy Orlik, Damian Pierri, Daniel Pérez-Ruiz, Louis-Philippe Rochon, Nicole Toftum, Fernando Toledo, Sebastián Valdecantos, Matías Vernengo
Contents
Contents:
Introduction to Monetary Policy Challenges in Latin America xxi
Fernando Toledo and Louis-Philippe Rochon
PART I ALTERNATIVE VIEWS ABOUT CENTRAL
BANKS AND MONETARY POLICY IN LACS
1 Assessing the new “integrated policy framework”:
a counterfactual analysis of the case of Argentina 2
Sebastián Valdecantos
2 Macroeconomic policy under a managed floating
exchange rate regime: a critical appraisal of the
international currency hierarchy literature 16
Simone Deos and Enzo Gerioni
PART II MONETARY POLICY TRANSMISSION
CHANNELS IN LACS
3 Inflation targeting in open economies: the contradictions
of determinacy and stability 34
Esteban Pérez Caldentey and Matías Vernengo
4 Limitations of monetary policies in open developing
economies: external capital inflows and sterilisation policies 59
Noemí Levy Orlik
5 Global financial cycle and monetary policy rules:
a neo-Kaleckian model for emerging markets and
developing economies 78
Gabriel Michelena and Fernando Toledo
PART III MONETARY POLICIES AND EXCHANGE RATES IN LACS
6 Exchange rate management in Latin America: towards the
making of a policy target exchange rate 97
Daniel Pérez-Ruiz, Gary Dymski, and Annina Kaltenbrunner
7 Real exchange rates, growth, and inflation targeting 117
Nelson Barbosa Filho
8 When are devaluations more contractionary? A quantile
VAR estimation for Argentina 132
Gabriel Montes-Rojas and Nicolás Bertholet
PART IV MONETARY POLICIES, INTERNATIONAL
RESERVES, AND SUSTAINABLE FINANCE IN LACS
9 Latin American Reserve Fund: Latin America’s
alternative to the IMF? 150
William N. Kring
10 Climate change, monetary policy, and green finance in
Latin America: the open economy dimension 168
Pablo G. Bortz and Nicole Toftum
PART V MONETARY POLICIES, CENTRAL BANKS,
INCOME INEQUALITY, AND FISCAL POLICIES IN LACS
11 Fiscal responses to income inequality surges. A panel
estimation for Emerging Market and Developing
Economies (EMDEs) 185
Jorge Carrera, Pablo de la Vega, and Fernando Toledo
12 Fiscal and monetary policy challenges after COVID-19:
The Argentinean case 206
Damián Pierri
13 International reserves, repurchase agreements, and the
Brazilian monetary policy 220
Sylvio Antonio Kappes
14 External debt and economic growth in Latin America and
the Caribbean 230
Alfredo Schclarek Curutchet
Index 256
Introduction to Monetary Policy Challenges in Latin America xxi
Fernando Toledo and Louis-Philippe Rochon
PART I ALTERNATIVE VIEWS ABOUT CENTRAL
BANKS AND MONETARY POLICY IN LACS
1 Assessing the new “integrated policy framework”:
a counterfactual analysis of the case of Argentina 2
Sebastián Valdecantos
2 Macroeconomic policy under a managed floating
exchange rate regime: a critical appraisal of the
international currency hierarchy literature 16
Simone Deos and Enzo Gerioni
PART II MONETARY POLICY TRANSMISSION
CHANNELS IN LACS
3 Inflation targeting in open economies: the contradictions
of determinacy and stability 34
Esteban Pérez Caldentey and Matías Vernengo
4 Limitations of monetary policies in open developing
economies: external capital inflows and sterilisation policies 59
Noemí Levy Orlik
5 Global financial cycle and monetary policy rules:
a neo-Kaleckian model for emerging markets and
developing economies 78
Gabriel Michelena and Fernando Toledo
PART III MONETARY POLICIES AND EXCHANGE RATES IN LACS
6 Exchange rate management in Latin America: towards the
making of a policy target exchange rate 97
Daniel Pérez-Ruiz, Gary Dymski, and Annina Kaltenbrunner
7 Real exchange rates, growth, and inflation targeting 117
Nelson Barbosa Filho
8 When are devaluations more contractionary? A quantile
VAR estimation for Argentina 132
Gabriel Montes-Rojas and Nicolás Bertholet
PART IV MONETARY POLICIES, INTERNATIONAL
RESERVES, AND SUSTAINABLE FINANCE IN LACS
9 Latin American Reserve Fund: Latin America’s
alternative to the IMF? 150
William N. Kring
10 Climate change, monetary policy, and green finance in
Latin America: the open economy dimension 168
Pablo G. Bortz and Nicole Toftum
PART V MONETARY POLICIES, CENTRAL BANKS,
INCOME INEQUALITY, AND FISCAL POLICIES IN LACS
11 Fiscal responses to income inequality surges. A panel
estimation for Emerging Market and Developing
Economies (EMDEs) 185
Jorge Carrera, Pablo de la Vega, and Fernando Toledo
12 Fiscal and monetary policy challenges after COVID-19:
The Argentinean case 206
Damián Pierri
13 International reserves, repurchase agreements, and the
Brazilian monetary policy 220
Sylvio Antonio Kappes
14 External debt and economic growth in Latin America and
the Caribbean 230
Alfredo Schclarek Curutchet
Index 256
