Why has the economy of Latin America responded more positively than Asia, Europe or the United States after being hit by the recent global financial crisis? Three years after the worst of the crisis, Latin America's GDP is 25 percent higher than its precrisis level. José De Gregorio, Governor of the Central Bank of Chile from 2007 to 2011, tells the story of how Latin America has responded to the crisis with a perspective that only an insider can have.
De Gregorio focuses on the seven largest economies of the region, Argentina, Brazil, Chile, Colombia, Mexico, Peru, and Venezuela (90 percent of the region's output). He argues that Latin America was resilient because of good macroeconomic policies, strong financial systems, and "a bit of luck."
A superb analysis of unparalleled clarity, José De Gregorio's How Latin America Weathered the Global Financial Crisis is essential reading for those who seek to understand Latin America's recent evolution, prospects, and challenges.
Agustín Carstens, Governor, Banco de México
Latin America stands out as a good performer in the current global economic crisis. José De Gregorio, an exceptionally accomplished economist and policymaker, analyzes why its record was different this time. He provides a convincing and important explanation of how and why good policies, consistently implemented, work—and why a little luck in the form of improved terms of trade also helps.
Stanley Fischer, Council on Foreign Relations, former governor of the Bank of Israel, and former top official at the International Monetary Fund and World Bank
De Gregorio's book offers brilliant insight into how sound macro-financial policies in good times mitigate vulnerabilities and support sustainable development. The book conveys a heartening message about Latin America's ability to outperform in the face of formidable challenges. It also delivers a finely nuanced message for consolidating long-term growth and prosperity: vigilance and preparedness on the macro-financial front and decisively advancing a social progress agenda to alleviate inequality and accelerate social integration.
Luis Alberto Moreno, President, Inter-American Development Bank
Latin America did poorly during the Asian crisis. But it weathered the global financial crisis much better. Why? José De Gregorio, who had a first row seat as governor of the Bank of Chile, gives a detailed and convincing answer: Most Latin American countries learned their lessons, and this time, they had their macroeconomic house in order. It is nice to know that old truths are sometimes right.... An important book.
Olivier Blanchard, Chief Economist, International Monetary Fund
A definitive analysis of Latin America's resilience after the recent global financial crisis from a leading academic researcher and former top policymaker. De Gregorio traces the history of the region's chronic financial instability and asks when, where, and why instability might return in the coming decade. An elegant synthesis of theory and practice. Must reading for scholars, students, and policymakers interested in the Latin American experience and its lessons for the rest of the world.
Kenneth S. Rogoff, Thomas D. Cabot Professor of Public Policy, Harvard University
3. Exchange Rates and International Reserves
4. Financial Stability
5. Capital Flows
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