Policy Rules and Large Crises in Emerging Markets
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In response to the COVID-19 pandemic, Latin American countries temporarily suspended rules limiting debt, scal and monetary policies as mentioned in this paper , which implied a substantial deterioration of macroeconomic variables (e.g., real GDP declined by 9 . 5%) and high welfare costs (which was estimated as equivalent to a 13% one-time reduction in non-tradable consumption).Abstract:
In response to the COVID-19 pandemic, Latin American countries temporarily suspended rules limiting debt, fiscal and monetary policies. Despite this increase in flexibility, the crisis implied a substantial deterioration of macroeconomic variables (e.g., real GDP declined by 9 . 5%) and high welfare costs (which we estimate as equivalent to a 13% one-time reduction in non-tradable consumption). This paper studies a sovereign default model with fiscal and monetary policies to assess the policy response and evaluate the gains from flexibility in times of severe distress.read more
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The Economic Impact of COVID-19 around the World
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External Shocks versus Domestic Policies in Emerging Markets
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References
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Debt with Potential Repudiation: Theoretical and Empirical Analysis
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