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This policy brief reviews the experience of the countries under the Euro currency, focusing on those that have been under significant pressure in recent years— Greece, Ireland, Portugal and Spain, referred to as “emerging” economies. At first they experienced stable growth and converged to the most advanced countries, but subsequent adjustment has proven elusive due to macroeconomic conditions, worsening structural deficiencies, and incomplete integration. The conditions for the survival of the Euro zone are complex and still far from fulfillment. While Latin America has recently experienced a similar period of stable growth, there is no room for complacency. The main lesson from Europe’s experience is that Latin America must take advantage of the current context of growth, stability and optimism in order to carry out much-needed reforms that will leave countries adequately prepared to face a downturn in the world economy.
After decades using monetary aggregates as the main instrument of monetary policy and having different varieties of crawling peg exchange rate regimes, Colombia adopted a full-fledged inflation-targeting (IT) regime in 1999, with inflation as the nominal anchor, a floating exchange rate, and the short-term interest rate as the main instrument. This paper examines the experience of the Colombian Ce ... (View publication)
This paper discusses Brazil’s structural reforms since the 1990s and areas where work remains to be done. Reforms of the 1990s included the containment of inflation, the adoption of a comprehensive Fiscal Responsibility Law, a successful debt restructuring program for subnational governments, the reduction of trade barriers, a wave of privatizations, and the expansion of health and education progr ... (View publication)
This paper analyzes reforms and counter-reforms in Bolivia in recent decades and their effects on the policymaking process (PMP) and productivity. Bolivia’s PMP has shifted from a formal representative democracy to a “participative and direct type of democracy” where street protest and other non-conventional forms of political participation have become dominant. While reforms have increased produc ... (View publication)
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