U.S. Monetary Policy’s impact on Latin America’s structure of production (1960-2010)

Nicolas Cachanosky

Latin American Journal of Economics-formerly Cuadernos de Economía, 2015, vol. 52, issue 1, 95-116

Abstract: This paper examines the effects of U.S. monetary policy on Latin America’s production structure before two economic crises, specifically the effects of monetary policy on the real economy at the industrial level. Changes in the federal funds rate produce uneven effects on output trends across sectors and industries that are more capital-intensive and involved in relatively long-term projects are more sensitive to changes in the federal funds rate. Periods of loose monetary policy result in resource misallocation that is costly to correct during a bust if investment is irreversible, with a particular pattern of economic distortion during an unsustainable boom.

Keywords: monetary policy; Latin America; international business cycles; structure of production (search for similar items in EconPapers)
JEL-codes: E32 E52 F44 (search for similar items in EconPapers)
Date: 2015
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