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EFFECTS OF US QUANTITATIVE EASING ON LATIN AMERICAN ECONOMIES

Published online by Cambridge University Press:  22 March 2019

César Carrera  and
Nelson R. Ramírez-rondán
César Carrera
Affiliation:
Central Bank of Peru and Universidad del Pacífico
Nelson R. Ramírez-rondán*
Affiliation:
Universidad del Pacífico
*
Address correspondence to: N.R. Ramírez-Rondán, Department of Economics, Universidad del Pacífico, Av. Salaverry 2020, Lima 11, Lima, Peru. e-mails: nramron@gmail.com; nr.ramirezr@up.edu.pe. Phone: (51) 1 2190100-ext. 2410.
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Abstract

Most emerging economies have been affected to some degree by the Fed’s quantitative easing (QE) policies. This paper assesses the impact of these measures in terms of key macroeconomic variables for four inflation-targeting small open economies in Latin America. We identify a QE policy shock in a structural vector autoregressive with block exogeneity and a mixture of zero and sign restrictions. Overall, we find that these QE policies have significant effects on financial variables such as the exchange rate, and these effects are larger with respect to those in output and prices. Furthermore, the effects vary across countries, and these are more significant in Chile and Mexico than in Peru and Colombia.

Keywords

Quantitative easingStructural vector autoregressionsSign and zero restrictions
Type
Articles
Information
Macroeconomic Dynamics , Volume 24 , Issue 8 , December 2020 , pp. 1989 - 2011
Copyright
© 2019 Cambridge University Press

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Footnotes

We would like to thank Joshua Aizenman, Lamont Black, Marcel Fratzscher, Michael Kamradt, Juan Londoño, Carlos Montoro, Fernando Perez, Bluford Putnam, Liliana Rojas-Suarez, Catherine and Sofia Carrera, Marco Vega, William A. Barnett, an associate editor, and two anonymous referees for their valuable comments and suggestions. We also thank the participants of the Central Bank of Peru Research Seminar; the CEMLA—Chicago Mercantile Exchange Group Seminar; the Fifth BIS CCA Research Conference; the 2014 Congress of the Peruvian Economic Association; the XXXII Meeting of Economists of the Central Bank of Peru; the XIII Meeting of the Central Bank Researchers Network; and the 2014 LACEA Meeting. Finally, we thank Jonas Arias and Juan Rubio-Ramírez for sharing their MATLAB codes. The views expressed are those of the authors and do not necessarily reflect those of the Central Bank of Peru. All remaining errors are ours.

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