This paper identifies Chile`s economic weaknesses and offers policy recommendations for increasing stability. Current problems include weak international financial links, a Central Bank mandate that is ill-designed to deal with terms of trade shocks, a propensity to waste scarce liquidity in the...

This study assesses macroeconomic volatility in Costa Rica, based largely on politically weak governments` inability or unwillingness to effect key reforms. Notable problems include volatility-prone fiscal and monetary policy, structurally weak public finances due to large domestic debts and...

The end of the great moderation has profound implications on the assessment of fiscal sustainability. The pertinent issue goes beyond the increase in stock of public debt/GDP induced by the global recession, to include the perspective that the sustainability of a given public debt/GDP depends on...

The end of the great moderation has profound implications on the assessment of fiscal sustainability. The pertinent issue goes beyond the obvious increase in the stock of public debt/GDP induced by the global recession, to include the neglected perspective that the vulnerabilities associated...

This paper estimates the path of inflation persistence in the United States over the last 50 years and draws implications about the evolution of the Federal Reserve's monetary-policy preferences. Standard models of central bank optimization predict that the central bank's preference for output...

This paper surveys Mexico`s economic weaknesses and provides related policy recommendations. Current problems include weak international financial links and external conditions, a recurrent credit crunch and financial underdevelopment problem, with particularly fragile banks, a weak fiscal...

This paper takes a critical look at available proxies of uncertainty. Two questions are adressed: (i) How do we evaluate proxies given that subjective uncertainty is inherently unobservable? (ii) Is there such a thing as a general macroeconomic uncertainty? Using correlations, some narrative...

We examine the open macroeconomic policy choices of developing economies from the perspective of the economic 'trilemma' hypothesis. We construct an index of divergence of the three trilemma policy choices, and evaluate its patterns in recent decades. We find that the three dimensions of the...

Financial turmoil is becoming a fact of life in Latin America. The 1990s have been characterized by enormous volatility in the magnitude and cost of capital flows. The correlation of capital swings across disparate countries suggests that the quality of emerging market policies in addition to...

The first five years of the flexible exchange rate and inflation targeting regime in Chile have shown positive results. Inflation is under control, the exchange rate has moved with the external conditions, monetary policy has been countercyclical and the cycle has apparently smoothened. Even...