Published on November 23, 2007
Slide1: Figure XIII IMF stabilization package: IMF stabilization package Fiscal cuts and financial reforms. Criticism of IMF policies for Asia: Irrelevance of fiscal cuts and the cost of tight money. The actual developments. (Stiglitz and Krugman). Relevance of these policies for Latin America. Structural reforms: Structural reforms Effects on real economy only after many years (Chile in 80’s and Latin America in 90’s). Growth and distribution. Long term significance. Faster effect on inflation. Change of economic model. The psychological element. Disinflation options: Disinflation options Disinflation with growth-Turkey’s problem. Sacrifice ratio in short and medium term. Latin America in 90’s and EC. Short term policies: Debt dynamics, controls on capital mobility, inflation targeting, shock Vs. gradualism (Colombia and Uruguay) Monetary union and imported credibility.