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Chavistas praise the two men for using Venezuela's oil riches to markedly reduce inequality and for lifting many Venezuelans out of poverty.

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Inflation | Economic Commission for Latin America and …

Latin America Economic Forecasts | FocusEconomics
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“Like other Latin American countries, Brazil needs to improve its infrastructure and train more engineers,” Mr. Rothkopf said, “but it embodies the rise of emerging powers, one of the great themes of this century.”

Latin America Economic Forecasts

Speaking on television next to a Venezuelan flag, Mr Maduro described the pay increase as
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Story: Greece's fiscal budget balance swung from a 271-million drachma surplus in 1939 to a 790-million drachma deficit in 1940 due to the onset of World War Two (foreign trade fell dramatically). This set the stage for an already-deteriorating fiscal position by the time Greece was invaded by the Axis powers at the end of 1940.


Latin America’s economic recovery is expected to benefit ..

Earlier this year, the US imposed sanctions on President Maduro, labelling him
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This led to the election of Alan Garcia in 1985 as president. Garcia enacted populist economic reforms that only served to weaken the economy and shut Peru out of international credit markets. Faced with a lack of access to credit and deteriorating economic conditions, sustained high inflation became hyperinflation in Peru.

Chavistas in turn accuse the opposition of being elitist and of exploiting poor Venezuelans to increase their own riches.
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A considered answer might rest on the response to two additional questions. The first: what is the estimated impact of such a monetary tightening on inflation and output? In simulations of a theoretical model developed at the IDB, calibrated to five of Latin America’s largest economies with inflation targeting, a less-hawkish policy implies higher inflation but with little positive impact on output. The second question: how such rises in inflation may impact inflation expectations and the credibility of the anchor. In a forthcoming , we find that when current inflation rises above target, shocks to it have a greater impact on medium term inflation expectations. These two results suggest that the decision of central banks to err on the side of caution, might have been the best approach.

Inflation targeting has served countries in Latin America well

But while growth remains below estimates of potential, gradualism may be the best approach; when output is low, fiscal multipliers are high. Instead of reducing overall spending too much, it may be better to switch it towards investment. But the private sector frequently distrusts a gradual approach and may demand higher interest rates. An explicit plan backed by an institutional framework that ensures steady progress, coupled with transparency over successes and failures, is key to making gradual fiscal convergence work. Any departure from these principles will likely lead to higher spreads and lower private investment, again risking a counterproductive outcome.


Story: Zimbabwe's hyperinflation was preceded by a long, grinding decline in economic output that followed Robert Mugabe's land reforms of 2000-2001, through which land was expropriated largely from white farmers and redistributed to the majority black populace. This led to a 50 percent collapse in output over the next nine years.

Latin America's 2 largest economies are ..

Oil accounts for about 95% of Venezuela's export revenues and was used to finance some of the government's generous social programmes which, according to official figures, have provided more than one million poor Venezuelans with homes.

Weekly Chart: Latin America's 2017 Economic Outlook …

But the region faces stiff macro challenges—the largest, perhaps, is fiscal adjustment. An unprecedented 15 countries have explicit plans to boost fiscal balances by about 2% of GDP. Why do countries have to adjust? The policy reaction to the global financial crisis was to expand discretionary fiscal expenditures such as public-sector wages, subsidies, and other transfers. That fiscal expansion helped reduce inequality but bore little relation to a “counter-cyclical fiscal response” and likely did little to assist growth. After the crisis, many countries ran fiscal deficits with positive output gaps, boosting debt levels even in relatively good times.