Peru: Selected Issues

July 15, 2016

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Format: Chicago

Peru: Selected Issues, (USA: International Monetary Fund, 2016) accessed November 21, 2024

Summary

This Selected Issues paper presents a comparative analysis of the macroeconomic adjustment in Chile, Colombia, and Peru to commodity terms-of-trade shocks. The study is done in two steps: (1) an analysis of the impulse responses of key macroeconomic variables to terms-of-trade shocks and (2) an event study of the adjustment to the recent decline in commodity prices. The experiences of these countries highlight the importance of flexible exchange rates to help with the adjustment to lower commodity prices, and staying vigilant in addressing depreciation pressures on inflation through tightening monetary policies. On the fiscal front, evidence shows that greater fiscal space, like that of Chile and Peru, gives more room for accommodating terms-of-trade shocks.

Subject: Capital spending, Dollarization, Exchange rates, Expenditure, Foreign exchange, Monetary policy, Public investment and public-private partnerships (PPP), Public investment spending

Keywords: Capital spending, Commodity, Commodity price, Commodity transfer pricing, CR, Dollarization, Exchange rate, Exchange rate volatility, Exchange rates, Global, Investment spending, ISCR, Loan dollarization, Peru, Public investment and public-private partnerships (PPP), Public investment spending

Publication Details

Pages:

64
Volume:

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DOI:

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Issue:

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Series:

Country Report No. 2016/235
Stock No:

1PEREA2016002
ISBN:

9781475582741
ISSN:

1934-7685

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