“Oil is at a negative price, -US$37 a barrel.” Those were the headlines on April 20. A negative price for oil? That makes no sense many friends told me. To understand this, let’s take a few steps back. There are two standard prices for the global oil market. In the United States, a futures market on a blend known as WTI (or West Texas Intermediate) is an important reference … [Read more...] about Negative Oil: What Is behind the Negative Oil Price?
Macroeconomics and Finance
What Can Central Banks Do to Mitigate the Effects of the Coronavirus?
The unprecedented conditions created by the spread of the coronavirus call for exceptional policy responses from the regional monetary authorities. Besides traditional tools such as interest rate reductions, central banks have been pursuing unconventional measures to avoid permanent consequences from a transitory, but potentially severe, negative shock. Since the 2008 global … [Read more...] about What Can Central Banks Do to Mitigate the Effects of the Coronavirus?
Policies and Projections for Latin America and the Caribbean in the Time of Covid-19
The novel coronavirus and the disease it causes, Covid-19, have imposed severe human and economic costs around the world. Cases are growing in Latin America and the Caribbean and if there is one lesson from other countries it is that early action to stop the spread of the virus is key. A recent analysis suggests that there would have been around 3.3 million deaths in the region … [Read more...] about Policies and Projections for Latin America and the Caribbean in the Time of Covid-19
Fiscal Policy in the Time of Coronavirus: Constraints and Policy Options for Latin American and Caribbean Countries
Latin America and the Caribbean is suffering a heavy blow as the novel coronavirus is spreading, governments are sending people home, and only a few businesses are allowed to operate. This happens against a grim backdrop of financial fragility, and a flight to quality assets in developed countries, with the resulting doubling of credit spreads in emerging markets since January … [Read more...] about Fiscal Policy in the Time of Coronavirus: Constraints and Policy Options for Latin American and Caribbean Countries
Latin America has experienced sudden stops in the past. The coronavirus takes the challenge to a new level.
Financial markets are in turmoil with the spread of COVID-19 and its consequences for the global economy. Emerging markets suffer particularly acutely in times of financial uncertainty, as global investment portfolios shift to safer asset classes. This means that the COVID-19 shock is creating a “sudden stop” in capital flows for emerging markets. The costs of sudden stops for … [Read more...] about Latin America has experienced sudden stops in the past. The coronavirus takes the challenge to a new level.