Paraguay: Selected Issues

International Monetary Fund

No 2012/212, IMF Staff Country Reports from International Monetary Fund

Abstract: This Selected Issues paper for Paraguay discusses how capital inflows contributed to credit expansions. Capital inflows contribute to a rapid expansion of private credit, exacerbating credit and business cycles. These effects are stronger under more rigid exchange rate arrangements and in economies that are more closed to trade. Macroeconomic evidence for Paraguay suggests that local firms might have experienced a relaxation of credit constraints during the high capital inflows phase. Evidence also shows that consumption, investment, and output has grown above trend alongside a strong credit growth.

Keywords: ISCR; CR; Ki boom; World food commodity price index; capital inflows boom; private sector; Paraguay economy; Capital inflows; Exchange rate arrangements; Foreign banks; Capital flows; Exchange rate flexibility; Global (search for similar items in EconPapers)
Pages: 29
Date: 2012-08-01
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