Monetary Policy Strategies for Latin America

Frederic Mishkin and Miguel A. Savastano

No 7617, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The paper examines possible monetary policy strategies for Latin America that may help lock-in the gains in the fight against inflation attained by the region during the 1990s. We start by calling for a refocus of the debate about the conduct of monetary policy away from thinking that it is about whether the nominal exchange rate should be fixed or flexible. Instead we argue that the focus should be on whether the monetary policy regime appropriately constrains discretion in monetary policymaking. This focus suggest that there are three basic frameworks that deserve serious discussion as possible, long-run strategies for monetary policy in Latin America: a hard exchange-rate peg, monetary targeting, and inflation targeting. We look at the advantages and disadvantages of each of these strategies and then examine the recent track record of monetary policy in some Latin American countries for clues as to which of the three strategies might be best suited to economies in the region.

JEL-codes: E5 F33 (search for similar items in EconPapers)
Date: 2000-03
New Economics Papers: this item is included in nep-ifn and nep-mon
Note: EFG IFM ME
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Citations: View citations in EconPapers (69)

Published as Journal of Development Economics, Vol. 66, no. 2 (December 2001): 415-444
Published as Mishkin, Frederic S. and Miguel A. Savastano. "Monetary Policy Strategies For Emerging Market Countries: Lessons From Latin America," Chinese Economic Studies, Vol. 44, no. 2/3 (Summer 2002): 45-82

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