This paper analyzes the fiscal and monetary policy responses to crises in Latin America over the last 40 years. We argue that, on average, Latin American countries have "graduated" in terms of their policy responses in the sense that they have been able to switch from procyclical to...

Should inflation be thought of as “just another tax?” The theoretical basis for doing so dates back to Phelps (1973) and has been greatly refined ever since. Since optimal taxation minimizes the deadweight loss by equalizing the marginal distortions of all available taxes, including the...

This paper analyzes the fiscal and monetary policy responses to crises in Latin America over the last 40 years. We argue that, on average, Latin American countries have “graduated” in terms of their policy responses in the sense that they have been able to switch from procyclical to...

AbstractThe following sections are included:IntroductionGraduating ClassGraduation and “Fear of Free Falling”Graduation and “Fear of Free Falling”— Regression AnalysisConclusionsReferencesAppendix 1. Definition of Variables and SourcesAppendix 2. Countries in the SampleAppendix 3. Data...