Abstract

LATIN AMERICA

Title Page

LATIN AMERICA

NEW CHALLENGES TO GROWTH AND STABILITY

Editors

Dora Iakova, Luis M. Cubeddu, Gustavo Adler, and Sebastián Sosa

INTERNATIONAL MONETARY FUND

Copyright

© 2014 International Monetary Fund

Cover design: Don Dailey, Dailey Direct, Inc.

Cataloging-in-Publication Data

Joint Bank-Fund Library

Latin America: new challenges to growth and stability / editors: Dora Iakova, Luis M. Cubeddu, Gustavo Adler, and Sebastián Sosa. —Washington, D.C.: International Monetary Fund, [2014].

  • p.; cm.

Includes bibliographical references and index.

1. Latin America – Economic conditions. I. Iakova, Dora. II. Cubeddu, Luis M. III. Adler, Gustavo, 1974- IV. Sosa, Sebastian. V. International Monetary Fund.

HC123 .L38 2014

ISBN: 9781498328166 (Paper)

Disclaimer: The views expressed in this book are those of the authors and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

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Contents

  • Acknowledgments

  • Introduction

  • Dora Iakova

  • PART I | LATIN AMERICA’S GROWTH PROSPECTS

  • 1 | Latin America: Rising to New Challenges

    • Dora Iakova, Sebastián Sosa, and Alejandro Werner

  • 2 | Potential Growth in Latin America

    • Sebastián Sosa, Evridiki Tsounta, and Hye Sun Kim

  • 3 | After the Boom: Commodity Prices and Economic Growth in Latin America and the Caribbean

    • Bertrand Gruss

  • PART II | MANAGING THE COMMODITY PRICE CYCLE: HAVE POLICIES IMPROVED?

  • 4 | Commodity Price Cycles: The Perils of Mismanaging the Boom

    • Gustavo Adler and Sebastián Sosa

  • 5 | Terms-of-Trade Booms: Saving-Investment Patterns and a New Metric of Income Windfall

    • Gustavo Adler and Nicolas E. Magud

  • 6 | External Conditions and Debt Sustainability in Latin America

    • Gustavo Adler and Sebastián Sosa

  • 7 | Has Fiscal Policy Become Less Procyclical in Latin America?

    • Alexander Klemm

  • PART III | IS LATIN AMERICA VULNERABLE TO RISING CAPITAL FLOW VOLATILITY?

  • 8 | Riding Global Waves: The Impact of External Financial Shocks on Emerging Market Economies

    • Gustavo Adler and Camilo E. Tovar

  • 9 | Global Financial Shocks and Gross Capital Flows in Latin America

    • Gustavo Adler, Marie L. Djigbenou, and Sebastián Sosa

  • 10 | Spillovers to Latin America from the Normalization of U.S. Monetary Policy

    • Alexander Klemm, Andre Meier, and Sebastián Sosa

  • 11 | Housing Markets in Latin America: Do We Need to Worry About a Bubble?

    • Luis Cubeddu, Camilo E. Tovar, and Evridiki Tsounta

  • Index

Acknowledgments

This book is based on research done by the Western Hemisphere Department’s Regional Studies team at the International Monetary Fund. Earlier versions of some of the chapters were published in the IMF’s Regional Economic Outlook: Western Hemisphere between 2012 and 2014.

The authors are grateful for comments and feedback from IMF colleagues, particularly Alejandro Werner, Nicolás Eyzaguirre, Miguel Savastano, Charles Kramer, Rodrigo Valdés, and Gian Maria Milesi-Ferretti. The chapters also benefited from comments from participants in seminars at the IMF and at Latin American central banks, academic institutions, the Latin American and Caribbean Economic Association, and the Center for Latin American Monetary Studies. Excellent research assistance was provided by Bennett Sutton, Alejandro Carrión, Marola Castillo, Andresa Lagerborg, Hye Sun Kim, Anayochukwu Osueke, and Carlos Rondón. Assistance in the production of this book was provided by Patricia Delgado Pino. Joanne Johnson of the Communications Department coordinated editing and production.