Can political interference deconstruct credibility that was hardly-earned through successful stabilization policy? We analyze the recent switch in the conduct of monetary policy by the Central Bank of Brazil (BCB). Brazil is the largest... more
Can political interference deconstruct credibility that was hardly-earned through successful stabilization policy? We analyze the recent switch in the conduct of monetary policy by the Central Bank of Brazil (BCB). Brazil is the largest Emerging Market Economy to formally target inflation, having adopted the Inflation Targeting (IT) regime in 1999. In the early years of IT, the BCB engaged in constructing credibility with price setting agents and succeeded to anchor inflation expectations to its target even under adverse conditions such as exchange rate crises. We argue that this effort to maintain IT rules-based policy ended in 2011, as a new country president and BCB board came to power. We then discuss the consequences of this credibility loss. Our main results can be summarized as follows: (i) we provide strong empirical evidence of the BCB's shift toward looser, discretionary policy after 2011; (ii) preliminary evidence suggests that this shift has affected agents' inflation expectations generating social and economic costs.
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This paper evaluates several indicators of external vulnerability and estimates the equilibrium real exchange rate for Costa Rica. While current indicators are mostly positive, declining market shares of domestic exports, the expected... more
This paper evaluates several indicators of external vulnerability and estimates the equilibrium real exchange rate for Costa Rica. While current indicators are mostly positive, declining market shares of domestic exports, the expected decline in foreign direct investment, and the desirability of strengthening the reserve position recommend an improvement in the current account. Costa Rica's equilibrium real exchange rate is then
Research Interests:
Research Interests: Human Geography, International Trade, Agriculture, Agricultural trade, Development, and 17 moreApplied Economics, Free Trade, Trade Liberalization, Gravity, Gravity Model, Empirical, Agricultural Production, Protectionism, Public Administration and Policy, Technical Barriers to Trade, Economic Models, Economic Model, Bilateral trade, Developing nations, Empirical Analysis, Per Capita Income, and Developing Regions
The late Angus Maddison (1927-2010) made an outstanding contribution to economics and economic history. Following a career as a senior economist in the Organisation for Economic Co-operation and Development (OECD) he worked on a... more
The late Angus Maddison (1927-2010) made an outstanding contribution to economics and economic history. Following a career as a senior economist in the Organisation for Economic Co-operation and Development (OECD) he worked on a monumental statistical analysis of the historical growth in the world economy over 2000 years including China. His statistical methods create an implicit criticism of the projections
Research Interests:
Research Interests:
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This paper evaluates several indicators of external vulnerability and estimates the equilibrium real exchange rate for Costa Rica. While current indicators are mostly positive, declining market shares of domestic exports, the expected... more
This paper evaluates several indicators of external vulnerability and estimates the equilibrium real exchange rate for Costa Rica. While current indicators are mostly positive, declining market shares of domestic exports, the expected decline in foreign direct investment, and the desirability of strengthening the reserve position recommend an improvement in the current account. Costa Rica's equilibrium real exchange rate is then
Research Interests:
Research Interests:
Research Interests: Human Geography, International Trade, Agriculture, Agricultural trade, Development, and 19 moreApplied Economics, Free Trade, Gravity Equation, Trade Liberalization, Gravity, Gravity Model, Empirical, Agricultural Production, Protectionism, Public Administration and Policy, Subsidies, Technical Barriers to Trade, Economic Models, Economic Model, Bilateral trade, Developing nations, Empirical Analysis, Per Capita Income, and Developing Regions
Research Interests:
Research Interests:
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This paper utilizes data from more than 100 countries over 30 years to identify the key factors that make a country more attractive to foreign direct investment (FDI). We find evidence that a country’s potential marginal returns to... more
This paper utilizes data from more than 100 countries over 30 years to identify the key factors that make a country more attractive to foreign direct investment (FDI). We find evidence that a country’s potential marginal returns to capital, available infrastructure, degree of trade openness, labor force qualification, and macroeconomic stability have a positive impact on FDI inflows. Our estimates capture a change in the role played by trade protection and an increase in the importance of human capital as globalization progressed. An application of our models illustrate why Mercosul countries have underperformed their peers in attracting FDI.