Goodbye Inflation Targeting, Hello Fear of Floating? Latin America after the Global Financial Crisis*

Carmen Reinhart

MPRA Paper from University Library of Munich, Germany

Abstract: This paper focuses on some of the macroeconomic risks that lie ahead for Latin America. The discussion is informed by my work on crises and capital flows and their macroeconomic consequences. The trends and initial conditions that allowed the region to weather the global economic storm of 2008-2009 are discussed, as is the subsequent reversal of some of those benign trends. I review the historical patterns connecting large capital inflow surges, or “capital flow bonanzas,” with the likelihood of a variety of crises—banking, currency, external default and inflation. For Latin America, in particular, large capital flow bonanzas have seldom ended well. The implications for inflation of importing (via less than fully flexible exchange rates) the expansionary policy of the “North” are discussed.

Keywords: capital inflows; appreciation; currency crises; banking crises; inflation; debt (search for similar items in EconPapers)
JEL-codes: E3 E31 F3 F30 G01 N16 N26 (search for similar items in EconPapers)
Date: 2013-04
New Economics Papers: this item is included in nep-cba, nep-ifn, nep-lam, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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https://mpra.ub.uni-muenchen.de/51282/1/MPRA_paper_51282.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/51352/1/MPRA_paper_51282.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/51352/8/MPRA_paper_51352.pdf revised version (application/pdf)

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