Strong swings in business cycle conditions in industrial and emerging market economies (EMEs) alike have renewed the debate on effectiveness of stabilization policies. Traditionally it has been argued that EMEs are unable to pursue counter-cyclical monetary and fiscal policies due to financial...

This paper provides new empirical evidence on macroeconomic policies and results in Latin America and the Caribbean (LAC), based on recent data for the region and the world at large. Our results show that: (i) both monetary and fiscal policies are counter- (pro-) cyclical when credibility is...

Optimal stabilization policy is counter-cyclical, aiming at keeping output close to its potential. However it has been traditionally argued that emerging economies are unable to adopt counter-cyclical monetary and fiscal policy. Here we argue that the cyclical properties of macroeconomic...

This paper provides an empirical evaluation of external vulnerability using panel data methods for a worldwide sample of countries. Controlling for domestic conditions, the paper examines the growth volatility effects of outcome measures of trade and financial openness as well as four types of...

Money targeting (MT) was a highly popular monetary regime among central banks in both industrial and developing countries during the 1980s and 1990s. This paper presents a comprehensive empirical exploration of the possible explanations of why countries choose (and abandon) a MT regime. The...

Macroeconomic policies are designed to stabilize business cycle fluctuations. Usually, fiscal and monetary policies in industrial countries have been expansionary in response to weak domestic conditions. However, the cyclical properties of fiscal policies are a much more disputed issue among...

Macroeconomic volatility is the outcome of countries’ exposure to shocks (the magnitude and frequency of shocks that hit their economies) and their vulnerability (the ability to respond to these shocks). This paper conjectures that countries with higher degrees of trade and financial...

This paper provides an empirical evaluation of the influence of external conditions and international integration on growth performance, using panel methods for a large cross-country data set. Controlling for domestic conditions, the paper examines the growth effects of trade and financial...

FDI flows to developing countries surged in the 1990s, to become their leading source of external financing. This rise in FDI volume was accompanied by a marked change in its composition: investment taking the form of acquisition of existing assets (M&A) grew much more rapidly than investment in...

The main goal of the present paper is to estimate the equilibrium real exchange rate path for Chile using a simple model for the 1977.I – 2003.III period. Using cointegration techniques, we find a cointegrating relationship between the real exchange rate (RER) and its fundamentals —that is,...