CEPAL Review

Cepal Review is the leading journal for the study of economic and social development issues in Latin America and the Caribbean. Edited by the Economic Commission for Latin America, each issue focuses on economic trends, industrialization, income distribution, technological development and monetary systems, as well as the implementation of economic reform and transfer of technology. Written in English and Spanish (Revista de la Cepal), each tri-annual issue offers approximately 12 studies and essays undertaken by authoritative experts or gathered from conference proceedings.

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Inflation targeting works well in Latin America

This paper analyses the macroeconomic effects of inflation targeting (it) in five Latin American countries during the period 2000-2007. We perform three types of econometric tests, which coincide in showing that it regimes have contributed to decreasing the level and variability of both the rate of inflation and the short-term interest rate, compared with a group of non-it Latin American countries. Moreover, our empirical analysis clearly reveals that it has led to lower variability in gdp growth, but the net effects on the level of economic growth remain unclear. The main technical innovation of this paper is the estimation of a treatment effects model to solve the endogeneity problem of adopting it, which is inherently present in most of the econometric tests applied so far in this field.

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