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

57 Pages Posted: 1 Feb 2011

See all articles by Luis I Jácome

Luis I Jácome

International Monetary Fund (IMF)

Ali Alichi

International Monetary Fund (IMF)

Ivan Luis de Oliveira Lima

affiliation not provided to SSRN

Jorge Iván Canales-Kriljenko

International Monetary Fund (IMF)

Date Written: December 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: Brazil, Central bank autonomy, Central banks, Chile, Colombia, Cross country analysis, Financial crisis, Global Financial Crisis 2008-2009, Inflation targeting, Latin America, Mexico, Monetary policy, Peru

Suggested Citation

Jácome, Luis I and Alichi, Ali and de Oliveira Lima, Ivan Luis and Canales-Kriljenko, Jorge Iván, Weathering the Global Storm: The Benefits of Monetary Policy Reform in the LA5 Countries (December 2010). IMF Working Paper No. 10/292, Available at SSRN: https://ssrn.com/abstract=1751405

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 Luis De Oliveira Lima

affiliation not provided to SSRN

No Address Available

Jorge Iván Canales-Kriljenko

International Monetary Fund (IMF) ( email )

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

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