Abstract

COMBITA MORA, Gonzalo  and  ORTIZ SIERRA, Gilberto. Destabilizing an unstable economy: A new role for central banking?. Inv. Econ [online]. 2023, vol.82, n.325, pp.72-95.  Epub Nov 24, 2023. ISSN 0185-1667.  https://doi.org/10.22201/fe.01851667p.2023.325.86049.

The aim of this paper is to demonstrate that the current banking crisis in the United States is not an isolated or conjunctural event, but rather the most recent event in a continuous series of cycles of financial fragility caused by the conservative management of the Federal Reserve’s monetary policy since 1965. For this purpose, a critical theoretical and descriptive analysis is carried out, showing the impact of the Federal Reserve on the cyclical valuation of portfolios in the United States and also the adverse effect on the macroeconomic dynamics of Latin America since 1980. The conclusion is that the increasing financial fragility of agents’ balance sheets during the boom causes inflationary control measures through the interest rate to have an adverse permanent effect on the economy.

Keywords : Financial instability; monetary policy; external debt; monetary policy in economic development.

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