ABSTRACT
The chapter examines Latin America's economic expansion since the 1990s, paying special attention to its stop and go episodes, generally triggered by external shocks that sometimes mitigated, sometimes exacerbated its balance of payments constrain. The chapter shows how the combined impact of these external shocks and the macro-stabilisation policies implemented to face them have resulted in a long-run path of slow growth coupled with high inequality. Starting from the fact that the balance of payments constraint is a crucial stumbling block to boost growth in the region, the chapter shows that the set of policies marked by inflation targeting, fiscal austerity and opening of the capital accounts have not helped the region in its quest for economic development and growth. Finally, the chapter proposes that to overcome this situation, Latin America's macroeconomic policy design and implementation could do much better if attention was paid to some of Carlo Panico's numerous theoretical and empirical contributions on monetary and financial issues and their role in distribution and creation of value.
