The Legacy of the Crisis: Policy Options in a Favorable Environment

Guillermo LaGarda, Osmel Manzano Mazzali and Jordi Prat

MPRA Paper from University Library of Munich, Germany

Abstract: The region comprising Central America, Panama and Dominican Republic is on path towards a favorable economic environment, characterized by higher growth in the United States (its main trade partner), lower oil prices, and still low financing costs. This environment represents a window of opportunity for the region to overcome the vulnerabilities inherited from the financial crisis and assure long-term growth. The first legacy of the crisis has been higher public debt, which in turn raised risks of deteriorating credit quality. The second legacy involves higher external flows, which had lead to greater financial complexity and created new channels of contagion. This report identifies risks and lays forward guidelines to mitigate them. In addition, it further illustrates how a deterioration in the external environment can generate lower growth prospects for the region, emphasizing the importance of advancing with the aforementioned reforms. - See more at: https://publications.iadb.org/handle/11319/6821#sthash.6zIWwBoC.dpuf

Keywords: public debt; creditworthiness; economic fundamentals; structural reforms; debt tolerance; fiscal space; financing flows; networks; financial complexity; concentration of flows; contagion; macroprudential regulation; oil prices; growth. (search for similar items in EconPapers)
JEL-codes: E0 E01 E62 E66 F3 G17 G2 G38 H3 H30 H5 H6 H60 (search for similar items in EconPapers)
Date: 2015-01
New Economics Papers: this item is included in nep-ger and nep-mac
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Published in IDB Publications (2015): pp. 1-62

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