|DOWNLOAD FILE IN:|
This paper estimates inflation expectations for several Latin American countries using an affine model that takes as factors observed inflation and parameters generated by zero-coupon yield curves of nominal bonds. Implementing this approach avoids the use of inflation-linked securities, which are scarce in many of these markets. Market measures of inflation expectations free of any risk premium are thus obtained, eliminating potential biases included in other measures such as break-even rates. This method provides several advantages, such as making it possible to compute inflation expectations at any horizon and forward rates such as the expected inflation over the five-year period that begins five years from today. It is found that inflation expectations in the long run are fairly anchored in Chile and Mexico, while those in Brazil and Colombia are more volatile and less anchored. It is also found that expected inflation increases at longer horizons in Brazil and Chile, while it decreases in Colombia and Mexico.
Financial liberalization has not lived up to expectations, at least as far as interest rate spreads are concerned. Over the past decade, many countries in Latin America and the Caribbean have reformed their financial sectors and reaped major economic benefits as a result. However, the persistence of high interest rate spreads -the difference between the interest charged to borrowers and the rate p ... (View publication)
What are the sources of structural volatility in Latin America? To address this question, Macroeconomic Volatility in Reformed Latin America focuses on the factors responsible for macroeconomic instability in three Latin American economies: Argentina, Mexico, and Chile. It finds that volatility in these countries can largely be traced to two critical weaknesses: weak links with international finan ... (View publication)
Deeper financial integration is expected to enable low-saving countries to increase domestic investment but also to increase crisis risks by facilitating the accumulation of risky foreign liabilities. This paper explores the connections between financial integration, investment and crisis risk to assess this tradeoff. It confirms expectations but also finds that the accumulation of safe foreign as ... (View publication)
Hello, Welcome to the IDB!
Please join our mailing list by simply entering your email below.
Show inline popup 1
Show inline popup 2
Show inline popup 3
Show inline popup 4