%0 Generic
%A Cao-Alvira J.J.
%A Gomez-Gonzalez J.
%A Vallejo-Peña J.
%8 2024
%@ 13504851
%U http://hdl.handle.net/10818/62768
%X This paper examines the impact of real exchange rate shocks on policy interest rates in the five major inflation-targeting economies in LATAM. Using a SVAR model with identification based on sign and short-run restrictions, we find that monetary policy reacts to real exchange rate shocks across all five countries. Specifically, interest rates rise directly in response to a positive real exchange rate shock (appreciation). A subsequent reversal occurs after a few quarters, with statistical significance observed in three countries. Additionally, shocks to the policy rate are demonstrated to effectively induce a real depreciation of the exchange rate. © 2024 Informa UK Limited, trading as Taylor & Francis Group.
%I Applied Economics Letters
%T Inflation-targeting central bank responses to exchange rate shocks: evidence from Latin America
%R 10.1080/13504851.2024.2335372
%~ Intellectum