Weathering the Global Storm: The Benefits of Monetary Policy Reform in the LA5 Countries

Posted: 9 Jan 2011 Last revised: 29 Jan 2011

See all articles by Jorge Iván Canales-Kriljenko

Jorge Iván Canales-Kriljenko

International Monetary Fund (IMF)

Luis I Jácome

International Monetary Fund (IMF)

Ali Alichi

International Monetary Fund (IMF)

Ivan L. Oliveira Lima

affiliation not provided to SSRN

Date Written: December 1, 2010

Abstract

This paper highlights that central banks from Brazil, Chile, Colombia, Mexico, and Peru (the LA5 countries) reaped the benefits of what they sowed in successfully weathering the global crisis. The adoption of far-reaching institutional, policy, and operational reforms during the last two decades enabled central banks to build credibility about their commitment with the objective of price stability. Thus, when the 2007-08 supply shock and the financial crisis hit the world, the LA5 central banks reacted swiftly and effectively based on a flexible policy framework and with the support of strong macroeconomic and financial foundations. Building on the experience of the LA5 central banks and complementing with recommendations from the IMF’s technical advice, the paper provides several suggestions for countries seeking to strengthen the effectiveness of monetary policy.

Keywords: Latin America, monetary policy, inflation targeting

JEL Classification: E52, E58, E61

Suggested Citation

Canales-Kriljenko, Jorge Iván and Jácome, Luis I and Alichi, Ali and Oliveira Lima, Ivan L., Weathering the Global Storm: The Benefits of Monetary Policy Reform in the LA5 Countries (December 1, 2010). Available at SSRN: https://ssrn.com/abstract=1389842

Jorge Iván Canales-Kriljenko

International Monetary Fund (IMF) ( email )

700 19th Street N.W.
Washington, DC 20431
United States

Luis I Jácome (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Ali Alichi

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Ivan L. Oliveira Lima

affiliation not provided to SSRN ( email )

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