Ending Instability

3 Pages Posted: 16 Jul 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 Luis de Oliveira Lima

affiliation not provided to SSRN

Date Written: March 2011

Abstract

Brazil, Chile, Colombia, Mexico and Peru, the so-called Latin American Five (LA5), have set the pace for a region that has weathered the global financial crisis to become one of the strongest emerging markets. How did they manage to achieve this radical change that 20 years ago most would have thought unreachable? This paper argues that many factors — including some luck — played a role, but two crucial elements were central bank institutional reforms and changes to monetary policy frameworks. These far-reaching reforms did not take place overnight and were effective because for more than a decade the LA5 countries maintained responsible fiscal and financial policies that kept vulnerabilities in check. Together, those policies reinforced the ability of central banks to preserve price stability and build credibility so that when the global financial crisis hit, the LA5 central banks could react swiftly and effectively to insulate these economies from the worst of its effects.

Suggested Citation

Canales-Kriljenko, Jorge Iván and Jácome, Luis I and Alichi, Ali and de Oliveira Lima, Ivan Luis, Ending Instability (March 2011). Available at SSRN: https://ssrn.com/abstract=1886477 or http://dx.doi.org/10.2139/ssrn.1886477

Jorge Iván Canales-Kriljenko (Contact Author)

International Monetary Fund (IMF) ( email )

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

Luis I Jácome

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

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