The macroeconomics of the Latin American economic boom

Ocampo, José Antonio

2007-12

LC/G.2347-P

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This paper argues that the recent boom in the Latin Americaneconomies can be explained by the conjunction of two external factorsnot found together since the 1970s: strong commodity prices (more sofor hydrocarbons and mining products than for agricultural commodities);and exceptional external financing conditions. Concerning the latter, thekey development was the massive influx of capital during two periods of "exuberance" in international financial markets (between mid-2004 and April2006, and between mid-2006 and mid-2007);, particularly the second. It alsoargues for the importance of spreading and consolidating Latin America'stwo great (and complementary); macroeconomic policy innovations ofrecent years: countercyclical fiscal management (still confined to just a fewcountries); and active intervention in currency markets. Such interventionneeds to be based on a growing recognition that the real exchange rateought to be an explicit goal of macroeconomic policy.

Includes bibliography

CAPITAL MOVEMENTS; ECONOMIC CONDITIONS; ECONOMIC GROWTH; ECONOMIC POLICY; ECONOMIC STATISTICS; FISCAL POLICY; RAW MATERIALS; PRICES; MONETARY POLICY; MACROECONOMICS; INTERNATIONAL FINANCE; FOREIGN EXCHANGE RATES; POLITICA MONETARIA; PRECIOS; TIPOS DE CAMBIO; POLITICA FISCAL; MACROECONOMIA; MATERIAS PRIMAS; MOVIMIENTOS DE CAPITAL; POLITICA ECONOMICA; FINANZAS INTERNACIONALES; ESTADISTICAS ECONOMICAS; CONDICIONES ECONOMICAS; CRECIMIENTO ECONOMICO;