[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/h/elg/eechap/20918_1.html
   My bibliography  Save this book chapter

Assessing the new "integrated policy framework": a counterfactual analysis of the case of Argentina

In: Monetary Policy Challenges in Latin America

Author

Listed:
  • Sebastián Valdecantos
Abstract
After decades advocating for the adoption of flexible exchange rate regimes, in the last ten years the International Monetary Fund (IMF) seems to have taken a more permissive stance toward developing countries’ central banks adopting foreign exchange interventions and capital flows management as tools to mitigate the effects of the global financial cycle on their domestic economies. More recently, the IMF has developed a new “integrated policy framework” built upon a New Keynesian model that seems to support this broader open-mindedness regarding policymaking in developing countries. Specifically, it is claimed that small open economies can achieve macroeconomic stability and economic growth through a combination of an inflation-targeting monetary policy, interventions in the foreign exchange market, some restrictions on capital inflows, and the use of macroprudential policy. This chapter assesses the prescriptions of this policy framework using an empirical stock-flow consistent model for Argentina, a country that for the last ten years has been suffering a balance of payments crisis. The integrated policy framework proposed by the IMF is counterfactually tested for the years 2016 and 2017, when the country was indeed a net recipient of foreign financial flows. The goal is to determine whether this suggested policy mix would have generated more sustainable dynamics compared to the ones observed, which ended up in a currency crisis in 2018. Based on the results of the experiment, the chapter offers some reflections on which lessons about the integrated policy framework can be generalized to other small open economies and which results should be understood as specific to the Argentinean context.

Suggested Citation

  • Sebastián Valdecantos, 2023. "Assessing the new "integrated policy framework": a counterfactual analysis of the case of Argentina," Chapters, in: Fernando Toledo & Louis-Philippe Rochon (ed.), Monetary Policy Challenges in Latin America, chapter 1, pages 2-15, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:20918_1
    as

    Download full text from publisher

    File URL: https://www.elgaronline.com/doi/10.4337/9781802200706.00011
    Download Restriction: no
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:elg:eechap:20918_1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Darrel McCalla (email available below). General contact details of provider: http://www.e-elgar.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.