On Tropical Inflation Targeting

In his recent blog, Roberto Rigobon has directed attention to the role of fiscal policy in preventing real exchange rate appreciation in the inflation targeting (IT) regimes of Brazil, Colombia, and others. I would like to suggest a slightly broader focus, however, on the issue of what, if any, should be the role of exchange […]

Venezuelan Freedoms, Opium and Tomato Ketchup

It’s been a fascinating and educational experience for me to witness the high level academic dialogue on Brazil here in Nouriel’s new initiative, and I can only applaud the brainpower behind the debate on the issues thus far. Long may it continue. I will therefore ignore the subject totally and instantly lower the tone with […]

Government Procurement and Competition in Brazil

A couple of weeks ago, Brazil’s Federal Police arrested 46 people in 10 states in an operation that accused a construction company and public employees of corrupting procurement transactions for infrastructure projects. Under suspicion of being involved, the Minister of Mines and Energy resigned last week and just yesterday the supreme court ordered the deputy […]

Waving the storm but not the hurricane…

Favorable changes in global conditions in the last few years, along with improvements in domestic fundamentals in the last decades, have allowed Latin America to enjoy prosperous times and to become less vulnerable to a US economic slowdown and to sudden adverse changes in market volatility.  Furthermore, the possibility that these external settings stay somewhat […]

The un-Whining road of Fiscal Policy

Nouriel in his response to my “Worried, Whining, and un-Willing” blog asks several interesting questions. First, how fiscal policy can help with real exchange rate appreciation in general, and with capital inflows in particular? Second, can this be used elsewhere, such as in Brazil and Argentina? Third, what are the implications to the political economy […]

Worried, Whining, and un-Willing.

A couple of weeks ago I went to Colombia, and I found several things that were “business as usual”, but some others that were very unusual. It was not surprising that the cab driver knew the exchange rate up to the third decimal. It was surprising that he spent half an hour talking about the […]

Brazil’s high interest rate and appreciation of the BRL

Since its peak in September, 2005, the Selic (basic) interest rate has been falling in every COPOM (Brazilian Central Bank Open Market Committee) meeting until its current 12.5% level. This is the lowest in many years, albeit very high for an inflation forecast below 4%. In the same period, the BRL appreciated from 2.30 to […]

Argentina: The Strong Peso Cometh?

To begin, let us make it clear we have little doubt that Cristina Fernandez de Kirchner, current first lady, will become the next President of Argentina in the vote scheduled for November 2007. With only 5 months to go before polling day, the incumbent government has still to officially announce which of Los Kirchner will […]