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Cuadernos de Economía
Print version ISSN 0121-4772On-line version ISSN 2248-4337
Abstract
GIL-LEON, José Mauricio. Financial stability and central bank decisions: Colombia, Mexico, Peru and Chile case. Cuad. Econ. [online]. 2020, vol.39, n.81, pp.765-793. ISSN 0121-4772. https://doi.org/10.15446/cuad.econ.v39n81.76535.
This paper aims to explain the response of central banks to financial stability, using information from 4 different countries in Latin America between 2000 and 2017. Reaction functions are estimated in their basic and extended form, evidencing responses consistent with the inflation targeting regime, although varied responses to: the economic cycle and the behaviour of the exchange rate and the credit cycle. Also, through estimations of two panel VAR models, it is evident that the accumulation of international reserves is carried out as a precaution, but financial vulnerability persists due to capital flows shocks.
JEL: E32; E44; E58; G01.
Keywords : Financial stability; target inflation; central banks; financial crisis.