Vegh, Carlos A.'s Books

Open Economy Macroeconomics in Developing Countries

By: Carlos A. Vegh

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Open Economy Macroeconomics in Developing Countries

By: Carlos A. Vegh

A comprehensive and rigorous text that shows how a basic open economy model can be extended to answer important macroeconomic questions that arise in emerging markets. This rigorous and comprehensive textbook develops a basic small open economy model and shows how it can be extended to answer many important macroeconomic questions that arise in emerging markets and developing economies, particularly those regarding monetary, fiscal, and exchange rate issues. Eschewing the complex calibrated models on which the field of international finance increasingly relies, the book teaches the reader how to think in terms of simple models and grasp the fundamentals of open economy macroeconomics. After analyzing the standard intertemporal small open economy model, the book introduces frictions such as imperfect capital markets, intertemporal distortions, and nontradable goods, into the basic model in order to shed light on the economy's response to different shocks. The book then introduces money into the model to analyze the real effects of monetary and exchange rate policy. It then applies these theoretical tools to a variety of important macroeconomic issues relevant to developing countries (and, in a world of continuing financial crisis, to industrial countries as well), including the use of a nominal interest rate as a main policy instrument, the relative merits of flexible and predetermined exchange rate regimes, and the targeting of “real anchors.” Finally, the book analyzes in detail specific topics such as inflation stabilization, “dollarization,” balance of payments crises, and, inspired by recent events, financial crises. Each chapter includes boxes with relevant empirical evidence and ends with exercises. The book is suitable for use in graduate courses in development economics, international finance, and macroeconomics.

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911

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MIT Press

Published Date

ISBN 10

026201890X

ISBN 13

9780262018906

Open Economy Macroeconomics in Developing Countries

By: Carlos A. Vegh

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Open Economy Macroeconomics in Developing Countries

By: Carlos A. Vegh

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911

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MIT Press

Published Date

ISBN 10

026201890X

ISBN 13

9780262018906

Effects of the Business Cycle on Social Indicators in Latin America and the Caribbean

When Dreams Meet Reality

By: Carlos A. Vegh,Guillermo Vuletin,Daniel Riera-Crichton,Jorge Pablo Puig,José Andrée Camarena,Luciana Galeano,Luis Morano,Lucila Venturi

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Effects of the Business Cycle on Social Indicators in Latin America and the Caribbean

When Dreams Meet Reality

By: Carlos A. Vegh,Guillermo Vuletin,Daniel Riera-Crichton,Jorge Pablo Puig,José Andrée Camarena,Luciana Galeano,Luis Morano,Lucila Venturi

After mediocre growth in 2018 of 0.7 percent. LAC is expected to perform only marginally better in 2019 (growth of 0.9 percent) followed by a much more solid growth of 2.1 percent in 2020. LAC will face both internal and external challenges during 2019. On the domestic front. the recession in Argentina; a slower than expected recovery in Brazil from the 2014-2015 recession, anemic growth in Mexico. and the continued deterioration of Venezuela. present the biggest challenges. On the external front. the sharp drop in net capital inflows to the region since early 2018 and the monetary policy normalization in the United States stand among the greatest perils. Furthermore, the recent increase in poverty in Brazil because of the recession points to the large effects that the business cycle may have on poverty. The core of this report argues that social indicators that are very sensitive to the business cycle may yield a highly misleading picture of permanent social gains in the region.

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World Bank Publications

Published Date

ISBN 10

1464814139

ISBN 13

9781464814136

LAC Semiannual Report October 2017

Between a Rock and a Hard Place: The Monetary Policy Dilemma in Latin America

By: Vegh, Carlos A. ,Morano, Lui,Friedheim, Diego

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LAC Semiannual Report October 2017

Between a Rock and a Hard Place: The Monetary Policy Dilemma in Latin America

By: Vegh, Carlos A. ,Morano, Lui,Friedheim, Diego

After a growth slowdown that lasted six years (including a contraction of 1.3 percent last year), the Latin American and Caribbean (LAC) region is finally expected to resume positive growth in 2017, with market analysts forecasting real GDP growth of 1.2 percent for 2017 and 2.3 percent for 2018. The recovery, particularly in South America, will be led by a strong rebound in Argentina, which is expected to grow by 2.8 percent in 2017 and 3.0 percent in 2018, and Brazil, which is expected to resume positive growth as well, expanding by 0.7 percent in 2017 and 2.3 in 2018, after contracting for two consecutive years. The usual external drivers of growth (particularly commodity prices, and growth in China and U.S.) are expected to remain relatively neutral, which points to the need for the region to reinforce its own sources of growth (e.g., structural reforms, investment in infrastructure, and further international trade both within and outside the region). Unfortunately, the region finds itself in a weak fiscal situation with 28 out of 32 countries with an overall fiscal deficit, which implies that a gradual but sustained fiscal consolidation will be needed in the years ahead. The report's main focus (Chapter 2) is on the monetary policy dilemma faced by countries in LAC. When a typical commodity-exporter country in LAC is hit by, say, a negative terms of trade shock, real GDP falls, the currency depreciates, and inflation increases. The Central Bank faces the dilemma of (i) increasing policy rates to defend the currency/fight inflation, but at the cost of aggravating the recession or (ii) reducing the policy rate, thus stimulating output, but encouraging further depreciation and inflation. Traditionally, LAC countries have chosen the first option and have thus pursued procyclical monetary policy (i.e., increasing policy rates in bad times). Recently, however, many countries have been able to switch and become countercyclical (i.e., reducing policy rates in bad times), which enables them to prop up the economy in recessionary times (which is particularly important when lack of fiscal space precludes countercyclical fiscal policy).

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World Bank Publications

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ISBN 10

1464812179

ISBN 13

9781464812170

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

Reserve Requirements in the Brave New Macroprudential World

By: Tito Cordella,Pablo Federico,Carlos Vegh,Guillermo Vuletin

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Reserve Requirements in the Brave New Macroprudential World

By: Tito Cordella,Pablo Federico,Carlos Vegh,Guillermo Vuletin

In the aftermath of the global financial crisis, it is hard to find any macroeconomic policy report that does not include some reference to financial stability or systemic risk and the resulting need for “macroprudential policies.” While there is a large and growing literature on macroprudential policies and financial stability, less attention has been paid to how macroprudential policies may facilitate macroeconomic stabilization in the presence of large capital flows. To fill such a gap, this report looks at the use of reserve requirements (RR) as a macroprudential tool. Its findings should be of particular interest to emerging market economists and policymakers that are faced with difficult questions regarding how to cope effectively with volatile capital flows. The analysis builds upon a new dataset on quarterly RR covering a large number of industrial and developing countries for the period 1970-2011. It finds that while no industrial country has resorted to active RR policy since 2004, almost half of developing countries have. Indeed, together with interest rates adjustments and forex interventions, RR seem to be an important component of a trio of policy instruments that developing countries have relied upon to navigate through the boom-bust cycles driven by capital flows. The ultimate reason for resorting to RR lies essentially on the procyclical behavior of the exchange rate over the business cycle in developing countries (with the currency depreciating in bad times and appreciating in good times) that complicates enormously the use of interest rates as a countercyclical instrument. Under such circumstances, RR are an effective instrument that can be used countercyclically when concerns about the effects of interest rates on the exchange rate become paramount. Finally, the report suggests that while, from a macroprudential point of view, the most common macroprudential instruments are equivalent, from a microprudential one they are not. Conflicts may thus arise between the micro- and macro-prudential policy stances. In addition, the overall design of macroprudential policies should follow a careful analysis of the role that different financial frictions play in various environments since similar symptoms can reflect very different underlying forces.

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World Bank Publications

Published Date

ISBN 10

1464802130

ISBN 13

9781464802133

From Known Unknowns to Black Swans

How to Manage Risk in Latin America and theCaribbean

By: Carlos A. Vegh,Guillermo Vuletin,Daniel Riera-Crichton

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From Known Unknowns to Black Swans

How to Manage Risk in Latin America and theCaribbean

By: Carlos A. Vegh,Guillermo Vuletin,Daniel Riera-Crichton

After a growth recovery, with an expansion of 1.1 percent in 2017, the region has encountered some bumps in the road. The Latin America and the Caribbean (LAC) region is expected to grow at a modest rate of 0.6 percent in 2018 and 1.6 percent in 2019. This slowdown in the region's recovery is mainly explained by the crisis that started in Argentina in April. the growth slowdown in Brazil. and the continued deterioration of Venezuela. Furthermore, net capital inflows to the region have fallen dramatically since early 2018, bringing once again to the fore the risks faced by LAC. In addition, natural disasters such as earthquakes and hurricanes have brought devastation to the region with disturbing frequency. The core of the report analyzes the foundations of risk. develops a theoretical framework to price risk instruments, and reviews how LAC has managed risk in practice.

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World Bank Publications

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ISBN 10

1464813736

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9781464813733

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

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International Monetary Fund

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Book's by Vegh, Carlos A.

Open Economy Macroeconomics in Developing Countries

Open Economy Macroeconomics in Developing Countries

Open Economy Macroeconomics in Developing Countries

Open Economy Macroeconomics in Developing Countries

Effects of the Business Cycle on Social Indicators in Latin America and the Caribbean

Effects of the Business Cycle on Social Indicators in Latin America and the Caribbean

LAC Semiannual Report October 2017

LAC Semiannual Report October 2017

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

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

Reserve Requirements in the Brave New Macroprudential World

Reserve Requirements in the Brave New Macroprudential World

From Known Unknowns to Black Swans

From Known Unknowns to Black Swans

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

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

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