New Frontiers for Monetary Policy in Chile
AbstractThis paper assesses the efficiency of the current Inflation Targeting (IT) scheme in place at the Central Bank of Chile. Using a small macroeconomic model of the Chilean economy, our main results are as follows: (i) an efficient monetary policy requires a bias towards output stabilization around its long run trend; (ii) the switch to forecast-targeting, implicit in the current IT scheme in Chile, results in an efficiency gain; (iii) targeting core inflation is not efficient; (iv) ceteris paribus, efficiency could be enhanced if monetary policy leans against the wind when facing shocks to the cost of international finance.
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Bibliographic InfoPaper provided by Central Bank of Chile in its series Working Papers Central Bank of Chile with number 125.
Date of creation: Nov 2001
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-02-10 (All new papers)
- NEP-CBA-2002-02-15 (Central Banking)
- NEP-MON-2002-02-15 (Monetary Economics)
- NEP-PKE-2002-02-15 (Post Keynesian Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Rómulo Chumacero Escudero, 2000.
"Se busca una raíz unitaria: evidencia para Chile,"
Estudios de Economia,
University of Chile, Department of Economics, vol. 27(1 Year 20), pages 55-68, June.
- Juan Pablo Medina & Rodrigo O. Valdés, 2002.
"Optimal Monetary Policy Rules under Inflation Range Targeting,"
Central Banking, Analysis, and Economic Policies Book Series,
in: Norman Loayza & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series (ed.), Monetary Policy: Rules and Transmission Mechanisms, edition 1, volume 4, chapter 5, pages 095-116
Central Bank of Chile.
- Juan Pablo Medina & Rodrigo Valdés, 2000. "Optimal Monetary Policy Rules Under Inflation Range Targeting," Working Papers Central Bank of Chile 61, Central Bank of Chile.
- Medina, J.P. & Valdes, R., 2000. "Optimal Monetary Policy Rules Under Inflation Range Targeting," Papers 61, Cambridge - Risk, Information & Quantity Signals.
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