The Historical Evolution of Monetary Policy in Latin America

Recent monetary policy in Latin America has evolved in five different phases. The first one revolves around the monetary doctoring missions, mainly but not exclusively, from the United States that established the first central banks in the region in the 1920s and 1930s adhering to a gold standard regime. The second phase comprises the first attempts to adopt a proactive countercyclical monetary stance and the granting of ample discretionary powers to the central bank to protect economies from the effects of the international business cycle. The third phase consists in the generalized adoption of developmental and inward industrialization goals by central banks. The fourth phase is characterized by central bank’s abandonment of developmental objectives placing the focus of their actions on price stability. The last phase in the evolution of monetary policy centers on inflation targeting. Currently, the most important and pressing challenges of monetary policy relate to its impact and pass-through on the real economy and to the relationships between monetary policy, fiscal policy, the financial system, and financial stability

Early twentieth-century Japanese worker saving: precautionary behaviour before a social safety net

This paper pools data from independent household surveys of Japanese workers roughly spanning the Taisho period (1912–1926), a time before private-business or government-provided social safety nets. First, we construct estimates of permanent and transitory income and then estimate saving functions consistent with intertemporal optimization. The saving behaviour of Japanese worker households is in turn compared with that of American worker households before World War I, a time when they too lacked access to general social services. The estimated marginal propensities to save out of permanent and transitory incomes were quite similar for Japanese and American worker households, but the Japanese ones saved more at a given level of income. The economic environment facing Japanese workers, however, seemed to be no riskier than that facing American workers. We attribute instead this result primarily to the widespread postal savings banks in Japan which increased the convenience and decreased the risk of saving.Social safety net, Precautionary saving, Worker surveys, Taisho era, Postal savings