Juan Pablo Medina's Books

Commodity Price Shocks and Imperfectly Credible Macroeconomic Policies in Commodity-Exporting Small Open Economies

By: Juan Pablo Medina Guzman,Claudio Soto

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Commodity Price Shocks and Imperfectly Credible Macroeconomic Policies in Commodity-Exporting Small Open Economies

By: Juan Pablo Medina Guzman,Claudio Soto

In this paper, we analyze how lack of credibility and transparency of monetary and fiscal policies undermines the effectiveness of macroeconomic policies to isolate the economy from commodity price fluctuations. We develop a general equilibrium model for a commodity-exporting economy where macro policies are conducted through rules. We show that the responses of output, aggregate demand, and inflation to an increase in commodity price are magnified when these rules are imperfectly credible and lack transparency. If policies are imperfectly credible, then transparency helps private agents to learn the systematic behavior of the autorities, reducing the effects of commodity prices shocks. Coherent with the model, we show cross-country evidence that monetary policy transparency and fiscal credibility reduce the incidence of export price volatility on output volatility. Also, our results indicate that having an explicit fiscal rule and an inflation targeting regime contribute to isolate the economy from terms of trade fluctuations.

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International Monetary Fund

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ISBN 10

1484306422

ISBN 13

9781484306420

Foreign Exchange Intervention and the Dutch Disease

By: Julia Faltermeier,Mr.Ruy Lama,Juan Pablo Medina

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Foreign Exchange Intervention and the Dutch Disease

By: Julia Faltermeier,Mr.Ruy Lama,Juan Pablo Medina

We study the optimal foreign exchange (FX) intervention policy in response to a positive terms of trade shock and associated Dutch disease episode in a small open economy model. We find that during a Dutch disease episode tradable production drops below the socially optimal level, resulting in lower welfare under learningby- doing (LBD) externalities. FX reserves accumulation improves welfare by preventing a large appreciation of the real exchange rate and by inducing an efficient reallocation between the tradable and non-tradable sectors. For an empirically plausible parametrization of LBD externalities, the model predicts that in response to a 10 percent increase in commodity prices FX reserves should increase by 1.5 percent of GDP. We also find that the welfare gains from optimally using FX reserves are twice as high as the gains from relying only on monetary policy. These results suggest that FX intervention is a beneficial policy to counteract the loss of competitiveness during a Dutch disease episode.

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International Monetary Fund

Published Date

ISBN 10

1475589239

ISBN 13

9781475589238

Is the Public Investment Multiplier Higher in Developing Countries? An Empirical Exploration

By: Mr.Alejandro Izquierdo,Mr.Ruy Lama,Juan Pablo Medina,Jorge Puig,Daniel Riera-Crichton,Carlos Vegh,Guillermo Javier Vuletin

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Is the Public Investment Multiplier Higher in Developing Countries? An Empirical Exploration

By: Mr.Alejandro Izquierdo,Mr.Ruy Lama,Juan Pablo Medina,Jorge Puig,Daniel Riera-Crichton,Carlos Vegh,Guillermo Javier Vuletin

Over the last decade, empirical studies analyzing macroeconomic conditions that may affect the size of government spending multipliers have flourished. Yet, in spite of their obvious public policy importance, little is known about public investment multipliers. In particular, the clear theoretical implication that public investment multipliers should be higher (lower) the lower (higher) is the initial stock of public capital has not, to the best of our knowledge, been tested. This paper tackles this empirical challenge and finds robust evidence in favor of the above hypothesis: countries with a low initial stock of public capital (as a proportion of GDP) have significantly higher public investment multipliers than countries with a high initial stock of public capital. This key finding seems robust to the sample (European countries, U.S. states, and Argentine provinces) and to the identification method (Blanchard-Perotti, forecast errors, and instrumental variables). Our results thus suggest that public investment in developing countries would carry high returns.

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International Monetary Fund

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ISBN 10

151352111X

ISBN 13

9781513521114

Unconventional Policies and Exchange Rate Dynamics

By: Gustavo Adler,Mr.Ruy Lama,Juan Pablo Medina

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Unconventional Policies and Exchange Rate Dynamics

By: Gustavo Adler,Mr.Ruy Lama,Juan Pablo Medina

We study exchange rate dynamics under cooperative and self-oriented policies in a two-country DSGE model with unconventional monetary and exchange rate policies. The cooperative solution features a large exchange rate adjustment that cushions the impact of negative shocks and a moderate use of unconventional policy instruments. Self-oriented policies (Nash equilibrium), however, entail limited exchange rate movements and an aggressive use of unconventional policies in both countries. Our results highlight the role of international policy cooperation in allowing the exchange rate to play the traditional role of shock absorber.

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International Monetary Fund

Published Date

ISBN 10

1484328779

ISBN 13

9781484328774

Monetary and Macroprudential Policies to Manage Capital Flows

By: Juan Pablo Medina Guzman,Mr.Jorge Roldos

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Monetary and Macroprudential Policies to Manage Capital Flows

By: Juan Pablo Medina Guzman,Mr.Jorge Roldos

We study interactions between monetary and macroprudential policies in a model with nominal and financial frictions. The latter derive from a financial sector that provides credit and liquidity services that lead to a financial accelerator-cum-fire-sales amplification mechanism. In response to fluctuations in world interest rates, inflation targeting dominates standard Taylor rules, but leads to increased volatility in credit and asset prices. The use of a countercyclical macroprudential instrument in addition to the policy rate improves welfare and has important implications for the conduct of monetary policy. “Leaning against the wind” or augmenting a standard Taylor rule with an argument on credit growth may not be an effective policy response.

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International Monetary Fund

Published Date

ISBN 10

1484302893

ISBN 13

9781484302897

Foreign Exchange Intervention under Policy Uncertainty

By: Gustavo Adler,Mr.Ruy Lama,Juan Pablo Medina Guzman

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Foreign Exchange Intervention under Policy Uncertainty

By: Gustavo Adler,Mr.Ruy Lama,Juan Pablo Medina Guzman

We study the use of foreign exchange (FX) intervention as an additional policy instrument in an environment with learning, where agents infer the central bank policy rules from its policy actions. Under full information, a central bank focused on stabilizing output and inflation can achieve better outcomes by using FX intervention as an additional policy tool. Under policy uncertainty, where agents perceive that monetary policy may also have exchange rate stabilization goals, the use of FX intervention entails a trade-off, reducing output volatility while increasing inflation volatility. While having an additional policy tool is always beneficial, we find that the optimal magnitude of intervention is higher in monetary policy regimes with lower uncertainty. These results indicate that the benefits of using FX intervention as an additional stabilization tool are greater in regimes where monetary policy is credibly focused on output and inflation stabilization.

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International Monetary Fund

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ISBN 10

1475547234

ISBN 13

9781475547238

Fiscal Consolidation During Times of High Unemployment

The Role of Productivity Gains and Wage Restraint

By: Mr.Ruy Lama,Juan Pablo Medina Guzman

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Fiscal Consolidation During Times of High Unemployment

The Role of Productivity Gains and Wage Restraint

By: Mr.Ruy Lama,Juan Pablo Medina Guzman

This paper studies the Swedish fiscal consolidation episode of the 1990s through the lens of a small open economy model with distortionary taxation and unemployment. We argue that the simultaneous reduction in the fiscal deficit and unemployment rate in this episode stems from two factors: (i) high growth rates of total factor productivity (TFP), experienced after the implementation of structural reforms; and (ii) a sustained wage restraint that occurred during the 1990s. The model simulations show that economic growth, accounted for mostly by TFP gains, improved the fiscal balance by 8 percentage points of GDP through an expansion of the tax base and fiscal revenues. Moreover, the combination of stable wages and higher TFP boosted net exports and led to a reduction in the unemployment rate. A counterfactual simulation assuming stagnant TFP shows that fiscal consolidation measures alone would have generated a double-digit unemployment rate without eliminating the fiscal deficit.

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International Monetary Fund

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ISBN 10

1513578782

ISBN 13

9781513578781

Shocks Matter: Managing Capital Flows with Multiple Instruments in Emerging Economies

By: Mr.Ruy Lama,Juan Pablo Medina

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Shocks Matter: Managing Capital Flows with Multiple Instruments in Emerging Economies

By: Mr.Ruy Lama,Juan Pablo Medina

We study the optimal management of capital flows in a small open economy model with financial frictions and multiple policy instruments. The paper reports two main findings. First, both foreign exchange intervention (FXI) and macroprudential polices are tools complementary to the monetary policy rate that can largely reduce inflation and output volatility in a scenario of capital outflows. Second, the optimal policy mix depends on the underlying shock driving capital flows. FXI takes the leading role in response to foreign interest rate shocks, while macroprudential policy becomes the prominent tool for domestic risk shocks. These results highlight the importance of calibrating the use of multiple instruments according to the underlying shocks that induce shifts in capital flows.

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International Monetary Fund

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ISBN 10

151354568X

ISBN 13

9781513545684

Is Exchange Rate Stabilization an Appropriate Cure for the Dutch Disease?

By: Mr.Ruy Lama,Juan Pablo Medina Guzman

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Is Exchange Rate Stabilization an Appropriate Cure for the Dutch Disease?

By: Mr.Ruy Lama,Juan Pablo Medina Guzman

This paper evaluates how successful is a policy of exchange rate stabilization to counteract the negative effects of a Dutch Disease episode. We consider a small open economy model that incorporates nominal rigidities and a learning-by-doing externality in the tradable sector. The paper shows that leaning against an appreciated exchange rate can prevent an inefficient loss of tradable output but at the cost of generating a misallocation of resources in other sectors of the economy. The paper also finds that welfare is a decreasing function of exchange rate intervention. These results suggest that stabilizing the nominal exchange rate in response to a Dutch Disease episode is highly distortionary.

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International Monetary Fund

Published Date

ISBN 10

1455202169

ISBN 13

9781455202164

Andean Express

By: Juan de Recacoechea

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Andean Express

By: Juan de Recacoechea

This moody murder mystery set during an overnight train journey in 1950s South America “delights like strong coffee savored in a cosmopolitan cafe” (Publishers Weekly). In 1952, a train makes its way from La Paz, Bolivia, to the Chilean seaport of Arica. Among the passengers are: a businessman with his much-younger wife, a man in priest’s garb hiding a secret, Irish and Russian expatriates, a miner, and a student. Before the trip is over, there will be many revelations—including the identity of a killer. From the author of American Visa, a winner of Bolivia’s National Book Prize, this atmospheric novel is “part social commentary, part mystery thriller . . . A chilling, tragic tale” (MultiCultural Review).

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147

Publisher

Akashic Books

Published Date

ISBN 10

1617750581

ISBN 13

9781617750588

The Diaspora Strikes Back

Caribeño Tales of Learning and Turning

By: Juan Flores

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The Diaspora Strikes Back

Caribeño Tales of Learning and Turning

By: Juan Flores

In TheDiaspora Strikes Back the eminent ethnic and cultural studies scholar Juan Flores flips the process on its head: what happens to the home country when it is being constantly fed by emigrants returning from abroad? He looks at how 'Nuyoricans' (Puerto Rican New Yorkers) have transformed the home country, introducing hip hop and modern New York culture to the Caribbean island. While he focuses on New York and Mayaguez (in Puerto Rico), the model is broadly applicable. Indians introducing contemporary British culture to India; New York Dominicans bringing slices of New York culture back to the Dominican Republic; Mexicans bringing LA culture (from fast food to heavy metal) back to Guadalajara and Monterrey. This ongoing process is both massive and global, and Flores' novel account will command a significant audience across disciplines.

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248

Publisher

Routledge

Published Date

ISBN 10

1135927596

ISBN 13

9781135927592

A Traveller's History of Spain

By: Juan Lalaguna

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A Traveller's History of Spain

By: Juan Lalaguna

This book will unlock the secrets of Spain's vibrant and colorful past, its people and culture for the interested traveler. It takes the reader on a journey from the earliest settlements on the Iberian Peninsula, through the influences of the Romans, the Goths, and the Muslims, the traumas of expansion and the end of the Empire, right up to the present. Maps and line drawings.

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308

Publisher

Interlink Publishing Group

Published Date

ISBN 10

1566563240

ISBN 13

9781566563246

Book's by Juan Pablo Medina

Commodity Price Shocks and Imperfectly Credible Macroeconomic Policies in Commodity-Exporting Small Open Economies

Commodity Price Shocks and Imperfectly Credible Macroeconomic Policies in Commodity-Exporting Small Open Economies

Foreign Exchange Intervention and the Dutch Disease

Foreign Exchange Intervention and the Dutch Disease

Is the Public Investment Multiplier Higher in Developing Countries? An Empirical Exploration

Is the Public Investment Multiplier Higher in Developing Countries? An Empirical Exploration

Unconventional Policies and Exchange Rate Dynamics

Unconventional Policies and Exchange Rate Dynamics

Monetary and Macroprudential Policies to Manage Capital Flows

Monetary and Macroprudential Policies to Manage Capital Flows

Foreign Exchange Intervention under Policy Uncertainty

Foreign Exchange Intervention under Policy Uncertainty

Fiscal Consolidation During Times of High Unemployment

Fiscal Consolidation During Times of High Unemployment

Shocks Matter: Managing Capital Flows with Multiple Instruments in Emerging Economies

Shocks Matter: Managing Capital Flows with Multiple Instruments in Emerging Economies

Is Exchange Rate Stabilization an Appropriate Cure for the Dutch Disease?

Is Exchange Rate Stabilization an Appropriate Cure for the Dutch Disease?

Andean Express

Andean Express

The Diaspora Strikes Back

The Diaspora Strikes Back

A Traveller's History of Spain

A Traveller's History of Spain

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