We develop a conceptual framework for analyzing the interactions between aggregate fiscal policy and monetary policy. The framework draws on existing models that analyze sovereign debt crises and balance-of-payments crises. We intend this framework as a guide for analyzing the monetary and fiscal history of a set of eleven major Latin American countries—Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela—from the 1960s until now.
This paper has been written as part of the Monetary and Fiscal History of Latin America Project sponsored by the Becker Friedman Institute at the University of Chicago. It will be a chapter in _A Monetary and Fiscal History of Latin America, 1960—2017_, edited by Timothy J. Kehoe and Juan Pablo Nicolini and published by the University of Minnesota Press.