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In this paper, we describe a new model of the Latin American region, built for the purpose of studying North-South macrotconomic interactions. We then use it to discuss the macroeconomic transmission of global shocks to Latin America. Section I1 of the paper presents the model and discusses its simulation properties, both empirically and by means of a simple analytical representation. In Section 111, we examine the effects of stylized global shocks on Latin America, in order to investigate the nature of the process by which such shocks are transmitted to the region from the OECD. In each case, we first briefly discuss the effects of these shocks on the world economy, as simulated by the global econometric model (GEM) developed at London Business School and the National Institute of Economic and Social Research. We then consider the implications suggested for Latin America when our regional model is connected up to GEM. The stylized shocks considered are a U.S. monetary contraction and a U.S. fiscal expansion. In Section IV, we consider a historical experiment. We investigate how the 1980s might have differed for Latin America if fiscal and monetary policies in the OECD had been different. In particular, we ask how out-turns might have changed if the global monetary contraction of the early 1980s had been avoided, or if fiscal policies had been better coordinated across the OECD. The results shed light on the question of whether coordination failures amongst the OECD countries exacerbated the adjustment problems of Latin America in the 1980s. I1 THE LATIN AMERICAN MODELThis section describes the properties of our macroeconometric model of Latin America. The full specification of the model is given in Srinivasan and Vines (1990). The model is an aggregate one which covers all the principal Latin ?The financial support of the ESRC (Grant No. R000232299) and the World Bank is gratefully acknowledged.