Monetary Policy Strategies for Latin America

Mishkin, Frederic S. ; Savastano, Miguel A.

World Bank, Washington, DC

关键词: ACCOUNTABILITY;    ADJUSTMENT MECHANISM;    ADVERSE EFFECTS;    AGGREGATE DEMAND;    AGGREGATE DEMAND CURVE;   

DOI  :  10.1596/1813-9450-2685
RP-ID  :  WPS2685

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

The authors examine possible monetarypolicy strategies for Latin America that may help lock inthe gains the region attained in the fight against inflationin the 1990s. Instead of focusing the debate about theconduct of monetary policy on whether the nominal exchangerate should be fixed or flexible, the focus should be onwhether the monetary policy regime appropriately constrainsdiscretion in monetary policymaking. Three basic frameworksdeserve serious discussion as possible long-run strategiesfor monetary policy in Latin America. The authors examinethe advantages and disadvantages of a hard exchange-ratepeg, monetary targeting, and inflation targeting, in lightof monetary policy's recent track record in severalLatin American countries, looking for clues about which ofthe strategies might be best suited to economies in theregion. The answer: It depends on the country'sinstitutional environment. Some countries appear not to havethe institutions to constrain monetary policy if discretionis allowed. In those countries, there is a strong argumentfor hard pegs, including full dollarization, that allowlittle or no discretion to monetary authorities. Incountries such as Chile, which can constrain discretion,inflation targeting is likely to produce a monetary policythat keeps inflation low yet appropriately copes withdomestic and foreign shocks. Monetary targeting as astrategy for Latin America is not viable because of thelikely instability of the relationship between inflation andmonetary aggregates, of which there is ample internationalevidence. No monetary strategy can solve the basic problemsthat have existed in Latin American economies for a longtime. The authors welcome the recent move in Latin Americancountries toward inflation targeting, but say no policy willsucceed unless government policies also create the rightinstitutional environment.