Download SIMPLE CORRELATION COEFFICIENTS (1990-2005)

External Shocks: How can regional
financial institutions help to reduce
the volatility of Latin American
economies?
Daniel Titelman
Chief Development Studies Unit
ECLAC
OUTLINE
1. The macroeconomic context
2. Regional Financial Integration
3. Conclusions
8.0
120
6.0
100
4.0
80
2.5
2.0
60
0.0
40
GDP grow th rate
Projected grow th rate for 2006
Projected grow th rate for 2007
Average grow th rate, 1980-2006
-2.0
20
Per capita GDP (2000=100) [right axis]
2007p
2006p
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
0
1981
-4.0
1980
Growth rate
GROWTH RATES HAVE BEEN
LOW AND VOLATILE
VOLATILITY OF GROWTH RATES
(Coefficients of variation, 10-year moving averages)
2.50
Latin America
2.00
Devoloping countries
excluding LAC
World
1.50
1.00
0.50
2004
2001
1998
1995
1992
1989
1986
1983
1980
1977
1974
1971
1968
1965
1962
1959
0.00
External shocks play an important role in growth dynamics:
Mainly capital flows and recently terms of trade
7
6
5
4
3
2
1
0
-1
GDP Grow th
Net Capital Inflow s as % of GDP
2005e
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
-2
WORLD GROWTH AND CHINA’S EXPANSION ARE HAVING
A POSITIVE IMPACT ON THE TERMS OF TRADE, BUT THIS
IMPACT VARIES ACROSS SUBREGIONS
VARIATION IN TERMS OF TRADE BETWEEN THE 1990s AND 2005
40%
31.0%
22.0%
20%
10.3%
0%
-11.8%
-20%
SOUTH AMERICA
SOUTH AMERICA
(excluding Chile
& Bol. Rep. of
Venezuela)
CENTRAL
AMERICA
MEXICO
World growth and China’s have a
positive effect on terms of trade
SIN PETROLEO
TOTAL
120
120
110
110
100
100
90
90
80
80
var. % 2005 vs. Prom '90
América del Sur:
26,3
América Central:
-11,8
México:
21,6
70
60
var. % 2005 vs. Prom '90
América del Sur:
23,5
América Central:
-2,2
México:
5,6
70
60
50
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
1977
1975
1973
1971
1969
1967
1965
1963
2005
2002
1999
1996
1993
1990
1987
1984
1981
1978
1975
1972
1969
1966
1963
1960
50
LATIN AMERICAN ECONOMIES ARE
STILL VULNERABLE TO SUDDEN
STOPS IN CAPITAL INFLOWS.
• Without downplaying the importance of
domestic factors, inefficiencies in
international financial markets often
exacerbate financial volatility, which, in
turn, amplifies or generates domestic
disequilibria.
VULNERABILITY INDICATORS
Short-term external debt / international reserves
Total external debt/ exports
VULNERABILITY INDICATORS
Public debt / GDP
Public debt in domestic currency / total public debt
0
20
40
60
80
90
B razil
70
Co lo mbia
P eru
50
A rgentina
Guatemala
30
Venezuela
10
2005
2003
2001
1999
1997
1995
1993
1991
Chile
Uruguay
end o f the nineties
2005
100
VULNERABILITY INDICATORS
Fixed-rate public debt / total
Dollarization of deposits (2005)
Uruguay
80
70
B o livia
60
50
P araguay
Nicaragua
40
30
20
Suriname
P erú
10
0
Co sta Rica
A rgentina
Uruguay
P eru
B razil
Haití
0
end o f the nineties
2005
20
40
60
80
100
Jun-05
Jun-06
Mar-06
Dec-05
Sep-05
EMBI+
Mar-05
Dec-04
Sep-04
Jun-04
Mar-04
Dec-03
Sep-03
Jun-03
Mar-03
Dec-02
Sep-02
Jun-02
Mar-02
Dec-01
Sep-01
Jun-01
Mar-01
Dec-00
Sep-00
Asian crisis
Jun-00
Mar-00
Dec-99
Sep-99
Jun-99
Mar-99
Dec-98
Sep-98
Jun-98
Mar-98
Dec-97
Sep-97
Jun-97
Mar-97
Dec-96
Sep-96
Jun-96
Mar-96
UNTENABLE LEVELS MAY BE
REACHED IN CRISIS SITUATIONS
SPREADS: EMBI+ AND LATIN AMERICAN COMPONENT
(December 1996 to June 2006)
1,600
Argentine debt
crisis
1,400
Latin America
1,200
1,000
800
600
400
200
Spreads prior to Asian crisis
0
CREDIT TO THE PRIVATE SECTOR AND
ECONOMIC ACTIVITY
(Average for 7 LAC countries)
25%
GDP grow th rate
20%
15%
10%
Credit to the private
sector in real terms
(yoy)
5%
0%
-5%
-10%
-15%
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
This happens in different countries in the region…
Argentina
Chile
Variación del Stock de Crédito Bancario al Sector Privado
30.0%
Variación del Stock de Crédito Bancario al Sector Privado
Crecimiento del PIB
18.0%
Crecimiento del PIB
16.0%
20.0%
14.0%
10.0%
12.0%
10.0%
0.0%
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
8.0%
-10.0%
6.0%
-20.0%
4.0%
2.0%
-30.0%
0.0%
-2.0%
-40.0%
1994
1995
1996
1997
1998
Colombia
1999
2000
2001
2002
2003
2004
2005
Venezuela
Variación del Stock de Crédito Bancario al Sector Privado
Crecimiento del PIB
25.0%
Variación del Stock de Crédito Bancario al Sector Privado
80.0%
Crecimiento del PIB
20.0%
60.0%
15.0%
40.0%
10.0%
20.0%
5.0%
0.0%
-5.0%
0.0%
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
1994
-20.0%
-10.0%
-40.0%
-15.0%
-20.0%
-60.0%
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
After more than a decade of reforms,
financial systems in the region are usually
characterised by:
• Shallow and underdeveloped markets
• The sector is mainly concentrated in banks,
and in short term deposits
• Credit is rationed, especially for lower and
middle firms, and R&D.
• High financial costs and high levels of
segmentation
• Reduced set of instruments for long term
finance.
Financial depth
Crédito Privado/PIB
Capital Mercado
Acciones/PIB
Tasa rotación (Turnover
ratio)
Bonos Privados/PIB
América Latina
Argentina
12
62
6
10
Brasil
33
36
32
10
Chile
75
86
10
19
México
18
18
21
3
Colombia
23
15
3
0
174
118
121
113
Italia
83
37
121
44
Francia
88
67
85
442
Alemania
117
37
129
43
España
111
71
157
24
Rep. Checa
30
18
52
7
Polonia
28
15
27
n/a
Japón
105
60
87
44
Korea
120
48
235
50
Malasia
132
141
34
53
Filipinas
35
40
9
0
USA
Europa
Asia
Fuente: Banco Mundial. Moody’s 2003
Main obstacles to entrepreneurial
development:
Chile: interest rate according to loan amount
(local currency, more than 90 days)
35%
30%
19.5%
19.1%
20%
15%
10%
9.6%
13.5%
5%
0-200UF
200-5.000UF
>5.000UF
Nota: A los valores de junio 2006: 0-200 UF = hasta US$ 6.000 aprox.
200-5000 UF = hasta US$ 120.000 aprox.
Dec-05
Jun-05
Dec-04
Jun-04
Dec-03
Jun-03
Dec-02
Jun-02
Dec-01
Jun-01
Dec-00
Jun-00
0%
Dec-99
Tasa Anual
25%
30.0%
27.7%
REGIONAL FINANCIAL
VULNERABILITY IS HEIGHTENED BY
• The lack of suitable mechanisms to
provide emergency financing to countries
facing
sudden
balance-of-payments
difficulties as a consequence of external
shocks.
• The absence of financial markets to hedge
and insure against external shocks
• This has led to a policy of self-insurance
based mainly on the accumulation of
international reserves, which is not always
a very efficient option.
TRENDS IN INTERNATIONAL RESERVE STOCKS
(Millions of US$)
BOLIVIA
COLOMBIA
1400
14000
1200
12000
1000
10000
800
8000
600
6000
400
4000
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04
COSTARICA
2400
1800
2200
1600
2000
1400
1800
1200
1600
1000
1400
800
1200
600
1000
400
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04
PERU
ECUADOR
2000
800
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04
VENEZUELA
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04
ARGENTINA
BRAZIL
14000
24000
28000
70000
12000
22000
24000
60000
10000
20000
50000
20000
8000
18000
40000
16000
6000
16000
4000
14000
30000
12000
2000
20000
8000
12000
0
10000
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04
CHILE
MEXICO
70000
18000
60000
16000
50000
14000
40000
12000
30000
10000
20000
8000
10000
6000
4000
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04
20000
0
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04
10000
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04
0
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04
RESERVE RATIOS
Reserves / Short-Term Debt
LAC(18) average
Reserves / M3
LAC(18) average
3.0
Reserves / Imports of Goods and Services (Months)
6
5
4
3
2
1
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
0
2004
2003
2002
2001
1996
2004
2002
2000
1998
1996
1994
1992
1990
1.0
2000
1.5
1999
2.0
1998
2.5
1997
0.34
0.32
0.30
0.28
0.26
0.24
0.22
0.20
TWO AREAS FOR REGIONAL
FINANCIAL COOPERATION
• Reserve pooling
• Financial Development: promote
markets for state-contingency securities
SUBREGIONAL FINANCIAL INSTITUTIONS
Andean Countries
BOLIVIA
COLOMBIA
ECUADOR
Central American
Common Market
PERU
VENEZUELA
CAF - ANDEAN
DEVELOPMENT BANK
CREATED 1968
COSTA RICA
EL SALVADOR
GUATEMALA
CABEI - CENTRAL
AMERICAN BANK
FOR ECONOMIC
INTEGRATION
CREATED 1961
HONDURAS
NICARGUA
CARICOM - Caribbean Common Market
BARBADOS, BELICE,
GUYANA, JAMAICA,
SURINAME, T.y TOBAGO,
Ay B, DOMINICA,
GRENADA,
MONTESERRAT, ST.KITTS,
ST.LUCIA, ST.VICENT
CARIBBEAN
DEVELOPMENT
BANK
CREATED 1969
BOLIVIA
COLOMBIA
COSTA RICA
ECUADOR
PERU
VENEZUELA
LATIN AMERICAN
RESERVE FUND
CREATED 1978
COSTA RICA JOINT
1991
FLAR EXPERIENCE
• Even though it covers only a few
countries, the Latin American Reserve
Fund has been quite successful in
providing short-term financing. Since its
creation, FLAR has contributed average
resources equivalent to 60% of IMF
exceptional financing to the Andean
Community countries.
• An important feature of FLAR’s financing
is its speed and timeliness
ANDEAN COMMUNITY: LOANS BY
FLAR AND GDP GROWTH
10
1100
8
900
Crecmiento CAN
700
6
Prestamos Flar
500
4
300
2
100
0
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
-100
-2
-300
-4
-500
RESERVE POOLING
• Access to increased reserve holdings.
• A possible reduction in reserve volatility.
• The ability of a Reserve fund to address
externals shocks depends on the
probability of negative events being
correlated
EXPANDING FLAR GEOGRAPHICAL COVERAGE: SIMPLE
CORRELATION COEFFICIENTS (1990-2005)
• Correlation coefficients of international reserves are
significant (at a 5% level) in 32 out of 45 cases and tend to
be quite high.
• These coefficients may be magnified by the upward trend in
reserve accumulation that the countries experienced during
the period considered.
International Reserves
BOLIVIA
BOLIVIA
COLOMBIA COSRICA
ECUADOR
PERU
VENEZUELA ARGENTINA
BRAZIL
CHILE
MEXICO
1
COLOMBIA
0.8551*
1
COSRICA
0.8308*
0.8117*
1
ECUADOR
0.7626*
0.7554*
0.5083
1
PERU
0.9446*
0.9168*
0.7862*
0.8463*
1
VENEZUELA
0.7572*
0.7962*
0.7978*
0.5710*
0.7071*
1
ARGENTINA
0.7426*
0.3941
0.4904
0.6151*
0.6075*
0.5103
BRAZIL
0.6184*
0.6256*
0.2749
0.8111*
0.7437*
0.3914
0.4711
1
CHILE
MEXICO
0.7966*
0.6984*
0.4902
0.8484*
0.8875*
0.4307
0.6240*
0.8867*
1
0.7559*
0.8526*
0.9330*
0.4522
0.7428*
0.7669*
0.2684
0.2565
0.4048
* Significant at the 5% level
1
1
EXPANDING FLAR GEOGRAPHICAL COVERAGE: SIMPLE
CORRELATION COEFFICIENTS (1990-2005)
• Correlation coefficients of the detrended series dropped
significantly for most countries, and some coefficients lost
significance (only 17 out of 45 were significant at the 5%
level).
Detrended International
Reserves
BOLIVIA
BOLIVIA
COLOMBIA COSRICA
ECUADOR
PERU
VENEZUELA ARGENTINA
BRAZIL
CHILE
MEXICO
1
COLOMBIA
0.3574
1
COSRICA
0.2353
-0.1345
1
ECUADOR
0.5483*
0.5803*
-0.1267
1
PERU
0.7117*
0.6669*
-0.0954
0.8067*
1
VENEZUELA
0.6101*
0.5173*
0.5682*
0.3378
0.4624
1
ARGENTINA
0.8084*
0.1220
0.5063
0.4328
0.4710
0.5854*
1
BRAZIL
0.4098
0.6420*
-0.3467
0.6969*
0.7810*
0.2738
0.1907
1
CHILE
MEXICO
0.4747
0.6663*
-0.1628
0.7167*
0.8698*
0.3371
0.3114
0.8385*
1
-0.1100
0.0102
0.4509
-0.3114
-0.3423
0.3637
-0.0955
0.3391
-0.4069
* Significant at the 5% level
1
SIMPLE CORRELATION COEFFICIENTS
(1990-2005)
• Correlation coefficients of the annual changes in
international reserves tend to be low and non-significant.
Variation of International
Reserves
BOLIVIA
BOLIVIA
COLOMBIA COSRICA
ECUADOR
PERU
VENEZUELA ARGENTINA
BRAZIL
CHILE
MEXICO
1
COLOMBIA
0.3841
1
COSRICA
0.1101
-0.1271
1
ECUADOR
0.4514
0.2692
0.0280
1
PERU
0.4341
0.6731*
0.0211
0.5594*
1
VENEZUELA
0.6537*
0.3088
0.4575
0.3736
0.3505
1
ARGENTINA
0.6474*
0.0433
0.3283
0.3615
0.2506
0.5736*
1
BRAZIL
0.2402
0.3420
-0.3035
0.2013
0.3577
0.1751
0.1000
1
CHILE
MEXICO
0.2197
0.4682
-0.0026
0.3032
0.7161*
0.1869
0.1471
0.5546*
1
0.0057
-0.0830
0.3695
-0.0592
-0.3289
0.2609
-0.0213
-0.2044
-0.4694
* Significant at the 5% level
1
SIMPLE CORRELATION COEFFICIENTS
(1990-2005)
• For the terms of trade, correlation coefficients do not show
a clear pattern. There is a mixture of negative and positive
coefficients of smaller and bigger magnitude, with only 15
of the 45 coefficients being positive and significant.
Terms of Trade
BOLIVIA
BOLIVIA
COLOMBIA COSRICA
ECUADOR
PERU
VENEZUELA ARGENTINA
BRAZIL
CHILE
MEXICO
1
COLOMBIA
-0.3857
1
COSRICA
-0.0265
-0.5212*
1
ECUADOR
-0.4364
0.8548*
-0.3141
1
PERU
0.1353
0.4311
0.1345
0.3264
1
VENEZUELA
-0.2040
0.9195*
-0.6262*
0.8300*
0.4396
1
ARGENTINA
-0.5025
0.7688*
-0.2849
0.6323*
0.4609
0.6951*
1
BRAZIL
-0.5120
0.2333
0.4063
0.2700
0.2989
-0.0237
0.4723
1
CHILE
MEXICO
-0.2032
0.8929*
-0.5168*
0.7543*
0.5623*
0.8779*
0.6892*
0.2755
1
-0.6184*
0.8073*
-0.4232
0.8840*
0.0798
0.7219*
0.6421*
0.3617
0.7373*
* Significant at the 5% level
1
SIMPLE CORRELATION COEFFICIENTS
(1990-2005)
• For private capital inflows, there are also no clear patterns
emerging. Positive correlations are generally not close to
unity. A regional fund could help to curb mechanisms of
crisis transmission between countries
Capital Flows
BOLIVIA
BOLIVIA
COLOMBIA COSRICA
ECUADOR
PERU
VENEZUELA ARGENTINA
BRAZIL
CHILE
MEXICO
1
COLOMBIA
0.2769
1
COSRICA
-0.0359
-0.4145
1
ECUADOR
0.3048
0.4135
-0.1336
PERU
0.1488
0.5593*
-0.4953
0.0972
1
VENEZUELA
0.3965
0.0319
-0.2219
-0.1989
0.1681
1
ARGENTINA
0.6836*
0.3872
-0.5573*
0.0972
0.4093
0.4964
1
BRAZIL
0.6046*
0.6547*
-0.1858
-0.0183
0.4382
0.3278
0.5000
1
CHILE
MEXICO
0.4935
0.4956
-0.3870
0.1212
0.6923*
0.0766
0.5912*
0.6294*
1
0.2735
-0.3849
-0.0200
0.0505
0.2172
0.0372
0.2922
-0.2847
0.3460
* Significant at the 5% level
1
1
Coverage Ratio
Ci 
( Ri   Rj )
j i
Var ( Ri   Rj )
j i
•
•
•
•
Where ρ is the degree of pooling 0< ρ<1
Ri is the total reserves of country i.
Rj is country j’s reserves.
VAR ( Ri   Rj ) is the added variance of country i and j
j i
• That is, with partial pooling, country i’s total access to
reserves equals all its own reserves plus the partially
pooled reserves of all other members of the pool.
• when ρ=0 no pooling
RESERVE VARIABILITY, (1990-2005)
mean
SD
BOLIVIA
1226
447
0.36
COLOMBIA
9916
2443
0.25
COSTA RICA
1478
479
0.32
ECUADOR
1634
656
0.40
PERU
9109
3480
0.38
VENEZUELA
16034
5277
0.33
ARGENTINA
18597
6445
0.35
BRAZIL
43106
14342
0.33
CHILE
14832
2829
0.19
MEXICO
35425
19825
0.56
Var. Coeff.
Note: The measure of volatility used was the variation coefficient (the ratio of the standard
deviation to the mean).
COVERAGE RATIOS, 1990-2005
p=0
p=0.1
p=0.2
p=0.3
p=0.4
p=0.5
p=0.6
p=0.7
p=0.8
p=0.9
p=1
BOLIVIA
2.74
3.38
3.41
3.41
3.42
3.42
3.42
3.42
3.42
3.42
3.42
COLOMBIA
4.06
3.69
3.57
3.52
3.49
3.47
3.45
3.44
3.44
3.43
3.42
COSTA RICA
3.09
3.44
3.43
3.43
3.43
3.43
3.43
3.43
3.43
3.43
3.42
ECUADOR
2.49
3.38
3.41
3.41
3.42
3.42
3.42
3.42
3.42
3.42
3.42
PERU
2.62
3.12
3.25
3.32
3.35
3.37
3.39
3.40
3.41
3.42
3.42
VENEZUELA
3.04
3.38
3.44
3.45
3.45
3.44
3.44
3.44
3.43
3.43
3.42
ARGENTINA
2.89
3.47
3.56
3.56
3.54
3.51
3.49
3.47
3.45
3.44
3.42
BRAZIL
3.01
3.29
3.43
3.49
3.51
3.50
3.49
3.48
3.46
3.44
3.42
CHILE
5.24
4.28
3.92
3.74
3.64
3.57
3.53
3.49
3.46
3.44
3.42
MEXICO
1.79
2.18
2.48
2.71
2.90
3.04
3.15
3.24
3.31
3.37
3.42
•
•
•
•
•
•
•
•
Improve
Don’t improve:
Bolivia
Costa Rica
Ecuador
Perú
Venezuela
Argentina
Brazil
Mexico
• Chile
• Colombia
Incentive
compatibility issues
Financial Development
• Development of deep and liquid markets for
state-contingency securities has been very
slow and difficult
– coordination problems.
– national policies lack of credibility.
– problems of transparency and
surveillance.
• There is a role for International Financial
Organizations
AT THE REGIONAL LEVEL
• IDB and World Bank
• FLAR and the use of International
Reserves
• Subregional Development Banks
IDB ISSUES IN LATIN AMERICAN CURRENCIES
Date of
Issues
Currency
Amount
USD equiv.
Coupon
Maturity
Brazil
11-May-04
BRL
550 m
94 m
0
5 years
Brazil
14-Dec-04
BRL
200 m
73 m
IGPM+6.26%
5 years
Colombia
23-Jun-04
COP
120 bn
44 m
IPC+0.54%
(issued at
discount)
7 years,
payable
Colombia
10-Mar-05
COP
168 bn
73 m
IPC+3.95%
7 years,
payable
Chile
25-Aug-05
CLP
36.3 bn
65 m
2.15% in UF
5 years
Peru
19-May-06
PEN
65.2 m
20 m
6.09375%
2 years
Source: Eloy Garcia, Presentation at the Seminar on the Role of Regional Funds in Macroeconomic Stabilization,
held in Lima, Peru, 17-18 July.
FLAR and Subregional Development Banks
• Better Investment grade than country members
• Could issue medium-term notes denominated in local
currency and indexed to domestic inflation, or to GDP, as a
way of helping to build a customer base for local-currency
bonds.
• Regional financial cooperation would facilitate and be
facilitated by policy coordination between countries. At the
same time, deepening financial integration creates needs and
incentives for higher degrees of macroeconomic
coordination: Transparency and information exchange
• In order to have the effect of helping to introduce a
benchmark (risk-free) asset, such borrowing could not,
however, exceed levels consistent with the maintenance of
current investment grade rating.
CACM
Risk rating (Moody’s long term debt in foreign currency)
Costa Rica
Ba1
El Salvador
Baa3
CABEI
Guatemala
Ba2
Baa1
Honduras
B2
Nicaragua
B2
Barbados
Baa2
Belize
Ba3
CARICOM
Guyana
Jamaica
B1
Surinam
B1
Trinidad & Tobago
Baa3
Antigua & Barbuda
CDB
AAA (S&P)
Dominica
Granada
Montserrat
Saint Kitts & Nevis
Saint Lucia
ANDEAN
COMMUNITY
Saint Vincent & the Grenadines
Bolivia
B3
Colombia
Ba2
Ecuador
Caa1
CAF
Peru
Ba3
A
Venezuela (Bolivarian Rep. of)
B
FLAR
Aa2
Summing up
• Latin American economies are still vulnerable to
external shocks, particularly sudden stops in
capital inflows.
• Regional financial integration could help to
reduce financial volatility at the regional level
– Reserve Pooling (more efficient than selfinsurance)
– Financial development
• Correlation analysis suggests that expanding
FLAR coverage is feasible. But there might be
incentive compatibility issues
Summing up
• There is a role for regional, sub regional
development banks and FLAR to promote
state contingency bonds.
• Regional financial agreements are
complements rather than substitutes for
global arrangements. The principle of
additionality must prevail.
• Deepening financial integration creates
needs and incentives for higher degrees of
macroeconomic coordination. The progress
made in this area in Latin America has so far
been rather limited
External Shocks: How can regional
financial institutions help to reduce
the volatility of Latin American
economies?
Daniel Titelman
Chief Development Studies Unit
ECLAC