Why Should We Monitor Financial Markets in Latin America?

Abstract

Until the 2008–2009 financial crisis, the importance assigned to financial markets, and to the housing market in particular, within the framework of macroeconomic policy analysis was secondary, not to say minor. While central banks maintained detailed monitoring of the financial sector and the housing market, in practice the discussion of monetary policy design was confined to the following principles: low inflation, a limited role for fiscal policy, and a flexible exchange rate. Continue reading...