Commodity-exporting countries across the world have benefited significantly from the commodity price boom of the past decade, which has enabled them to strengthen their economic fundamentals markedly along many dimensions. Being an important commodity-producing region, Latin America has witnessed a particularly stark transformation, in sharp contrast to its previous history of poor macroeconomic management.1 But does this transformation reflect a different and more prudent macroeconomic response to terms-of-trade shocks than in the past? Or is it simply that this time around the positive shock was much larger?

Contributor Notes

At the time of publication, an extended and more detailed version of this chapter was scheduled for inclusion in the Journal of International Money and Finance.
New Challenges to Growth and Stability