By Andrés Fernández, Daniel Hernaiz and Andrew Powell Most of the largest economies in Latin America have adopted inflation targeting [1]. A huge advantage of having such an anchor, and not relying on a fixed exchange rate to curb diverging expectations, is that the exchange rate is then determined by the market and can adjust to shocks. Given the large shocks the region has … [Read more...] about Interest Rates are Falling, But Not So Fast
Macroeconomics and Finance
When Government Capacity Creates Economic Options
Government capacity is in part the ability to hit the long ball, to have long-term policies that look beyond the next election and the next change in administration. In economic policy, as in social policy and so many other areas, it can make all the difference. Unfortunately, in too many countries of Latin America and the Caribbean winning the next election and installing … [Read more...] about When Government Capacity Creates Economic Options
Falling Inequality: A Brazilian Whodunnit
By Julián Messina, Francisco H.G. Ferreira and Sergio Firpo Long one of the world’s most unequal countries, Brazil surprised pundits by recording a massive reduction in household income inequality in the last couple of decades. Between 1995 and 2012, the country’s Gini coefficient for household incomes fell by seven points, from 0.59 to 0.52. (For comparison, all of the … [Read more...] about Falling Inequality: A Brazilian Whodunnit
Can Latin American Workers Dodge the Deaths of Despair?
For much of the last century, mortality rates in the United States fell steadily. But from 1998-2013, that trend reversed for a special demographic: non-Hispanic whites, aged 45-54. The problem, according to a new study by Nobel Laureate Angus Deaton, and fellow economist, Anne Case, lay in people lacking a college degree. Tens of thousands of those middle-aged whites were … [Read more...] about Can Latin American Workers Dodge the Deaths of Despair?
A New Trade World: Routes for Latin America and the Caribbean to Grow
It never rains but it pours sometimes seems to be just too appropriate a motto for Latin America and the Caribbean. Just as Argentina and Brazil appear set to post positive growth this year, uncertainty regarding global protectionism and the prospects of higher U.S. interest rates could dampen growth prospects across the region, as explained in the 2017 IDB Latin American and … [Read more...] about A New Trade World: Routes for Latin America and the Caribbean to Grow