No Time for Later: Rebuilding Macro Buffers in the Southern Cone amid a Revamped Global Financial Landscape

Accesible PDF image
Peer Reviewed icon Peer Reviewed
Author
Rodrigues Bastos, Fabiano ;
Date issued
Nov 2022
Subject
Economy;
Financial Market;
Fiscal Policy;
Investment;
Macroeconomic Policy;
Country Risk;
Emerging Market;
Standard Deviation;
Macroeconomy;
Finance
JEL code
E44 - Financial Markets and the Macroeconomy;
E52 - Monetary Policy;
E58 - Central Banks and Their Policies;
E62 - Fiscal Policy;
F42 - International Policy Coordination and Transmission
Country
Brazil;
Chile;
Uruguay;
Paraguay
Category
Discussion Papers
Global financial shocks under a revamped global financial landscape can produce unexpected, multi-faceted, and disruptive implications for emerging market economies. Using the VIX index as a proxy for global financial stress, we argue that Southern Cone macro conditions can undergo significant pressure under adverse global financial shocks. The region needs to start rebuilding macro buffers now -in addition to simultaneously correcting macro imbalances and enhancing policy frameworks- to cope with the emerging global financial environment. International organizations, including multilateral development banks, can play several key roles in supporting the rebuilding of macro buffers.