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A Decade of Reform in Latin America: Has it Delivered Lower Volatility?

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  • Gavin, Michael

Abstract

Have the economies of Latin America become less volatile as a result of the economic stabilization and structural reforms implemented during the past decade? The answer is a qualified yes. The reforms have helped, but more needs to be done to ensure the macroeconomic stability required for accelerated and more equitable long-run growth in the region. Structural reforms have helped reduce volatility, but volatility remains high by international standards and has not declined in all countries. The paper offers a policy agenda, raising questions for discussion in four key areas: (i) How can fiscal management be made more stabilizing? (ii) How can management of domestic financial markets contribute to lower economic volatility? (iii) How should capital flows be managed? (iv) What is the role of the exchange rate regime?

Suggested Citation

  • Gavin, Michael, 1997. "A Decade of Reform in Latin America: Has it Delivered Lower Volatility?," IDB Publications (Working Papers) 6206, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:6206
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    References listed on IDEAS

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    1. Gavin, Michael & Hausmann, Ricardo, 1996. "The Roots of Banking Crises: The Macroeconomic Context," IDB Publications (Working Papers) 6067, Inter-American Development Bank.
    2. repec:idb:wpaper:318 is not listed on IDEAS
    3. Gavin, Michael & Hausmann, Ricardo & Perotti, Roberto & Talvi, Ernesto, 1996. "Managing Fiscal Policy in Latin America and the Caribbean: Volatility, Procyclicality, and Limited Creditworthiness," IDB Publications (Working Papers) 6089, Inter-American Development Bank.
    4. Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 1-118.
    5. Leahy, John V & Whited, Toni M, 1996. "The Effect of Uncertainty on Investment: Some Stylized Facts," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(1), pages 64-83, February.
    6. King, Robert G. & Levine, Ross, 1993. "Finance, entrepreneurship and growth: Theory and evidence," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 513-542, December.
    7. Ramey, Garey & Ramey, Valerie A, 1995. "Cross-Country Evidence on the Link between Volatility and Growth," American Economic Review, American Economic Association, vol. 85(5), pages 1138-1151, December.
    8. Michael Gavin & Ricardo Hausmann & Roberto Perotti & Ernesto Talvi, 1996. "Managing Fiscal Policy in Latin America and the Caribbean: Volatility, Procyclicality, and Limited Creditworthiness," Research Department Publications 4032, Inter-American Development Bank, Research Department.
    9. Jeffrey D. Sachs, 1985. "External Debt and Macroeconomic Performance in Latin America and East Asia," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 16(2), pages 523-573.
    10. Cottani, Joaquin A & Cavallo, Domingo F & Khan, M Shahbaz, 1990. "Real Exchange Rate Behavior and Economic Performance in LDCs," Economic Development and Cultural Change, University of Chicago Press, vol. 39(1), pages 61-76, October.
    11. Michael Gavin & Ricardo Hausmann, 1996. "The Roots of Banking Crises: The Macroeconomic Context," Research Department Publications 4026, Inter-American Development Bank, Research Department.
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    Cited by:

    1. Mr. Paulo A Medas & Ms. Daria V Zakharova, 2009. "A Primeron Fiscal Analysis in Oil-Producing Countries," IMF Working Papers 2009/056, International Monetary Fund.

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