This paper investigates whether developing and emerging market countries can implement monetary policies similar to those used by advanced countries during the recent global crisis - injecting significant amounts of money into the financial system without facing major short-run adverse macroeconomic repercussions. Using panel data techniques, the paper analyzes episodes of financial turmoil in 16 Latin America during 1995-2007.
The results show that developing and emerging market countries should be cautious because injecting money on a large scale into the financial system may fuel further macroeconomic instability, increasing the chances of simultaneous currency crises.
IMF. Author/Editor: Jácome, Luis Ignacio ; Saadi Sedik, Tahsin ; Townsend, Simon.Authorized for Distribution: November 01, 2011.Series:Working Paper No. 11/258
This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
IMF. Author/Editor: Jácome, Luis Ignacio ; Saadi Sedik, Tahsin ; Townsend, Simon.Authorized for Distribution: November 01, 2011.Series:Working Paper No. 11/258
This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
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