Search

This paper offers an empirical analysis of how US unconventional monetary policy has affected Latin American countries. First, we estimate the effects of US monetary policy announcements on sovereign bond interest rates, exchange rates, and stock market indices for a set of emerging countries, including five Latin American economies. We found that QE announcements in 2008/2009 and the tapering talk in 2013 generated sizable sovereign yield and exchange rate fluctuations. We further find, just in a few cases, some excessive response of asset prices in Latin American countries. In the second part of the paper, we estimate a simple model that measures the influence of country-specific macroeconomic fundamentals on the transmission of US financial disturbances. An estimated model including the inflation rate, the CDS spread, the ratio of official reserves and market capitalization explains some of the observed cross-country heterogeneity of spillovers from US monetary policy announcements. Under this model, a greater impact from the normalization of US monetary policy can be expected in Latin America relative to other emerging economies. [ABSTRACT FROM AUTHOR]

This paper overviews patterns in bond issuance in local and external markets by firms in six large Latin American countries. Also, using an unbalanced panel of firm and market-level indicators for years 1995-2015, we control for variables representing several theories of capital structure to gauge the firm's decision on the choice of issuance jurisdiction. [ABSTRACT FROM AUTHOR]

This paper examines foreign exchange intervention practices and their effectiveness in containing currency appreciation, using a new qualitative and quantitative database for a panel of 15 economies covering 2004-2010, with special focus on Latin America. Qualitatively, it examines institutional aspects such as declared motives, instruments employed, the use of rules versus discretion, and the degree of transparency. Quantitatively, it assesses the effectiveness of sterilized interventions in influencing the exchange rate using a two-stage IV-panel data approach, which helps overcome endogeneity bias. Results suggest that interventions slow the pace of appreciation, but the effects decrease rapidly with the degree of capital account openness. At the same time, interventions are more effective in the context of already overvalued exchange rates. [ABSTRACT FROM AUTHOR]