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Productivity Growth and Disinflation in Chile

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  • Jose De Gregorio

Abstract

This paper analyzes the role productivity growth had on disinflation in Chile during the 1990s. It argues that productivity growth was key in avoiding the output costs of stabilization in a highly indexed economy. Disinflation from the early 1990s through 1998 was costless. Among the many external and domestic factors that contributed to good macroeconomic performance, which combined simultaneously very high rates of growth and declining inflation, productivity stands high. The paper’s simulation results illustrate the latter point.

Suggested Citation

  • Jose De Gregorio, 2003. "Productivity Growth and Disinflation in Chile," Working Papers Central Bank of Chile 246, Central Bank of Chile.
    • Handle: RePEc:chb:bcchwp:246
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    File URL: https://www.bcentral.cl/documents/33528/133326/DTBC_246.pdf
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    References listed on IDEAS

    as
    1. José de Gregorio & Jong-Wha Lee, 2004. "Growth and Adjustment in East Asia and Latin America," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2004), pages 69-134, August.
    2. de Gregorio, Jose, 1995. "Policy Accommodation and Gradual Stabilizations," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(3), pages 727-741, August.
    3. Fernando Lefort & Klaus Schmidt-Hebbel, 2002. "Indexation, Inflation and Monetary Policy: An Overview," Central Banking, Analysis, and Economic Policies Book Series, in: Fernando Lefort & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Serie (ed.),Indexation, Inflation and MOnetary Policy, edition 1, volume 2, chapter 1, pages 001-018, Central Bank of Chile.
    4. repec:idb:brikps:9174 is not listed on IDEAS
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    Citations

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    Cited by:

    1. Luis F. Céspedes & Claudio Soto, 2007. "Credibility and Inflation Targeting in Chile," Central Banking, Analysis, and Economic Policies Book Series, in: Frederic S. Miskin & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Se (ed.),Monetary Policy under Inflation Targeting, edition 1, volume 11, chapter 14, pages 547-578, Central Bank of Chile.
    2. Luis Felipe Céspedes & Ilan Goldfajn & Phil Lowe & Rodrigo O. Valdés, 2006. "Policy Responses to External Shocks: The Experiences of Australia, Brazil, and Chile," Central Banking, Analysis, and Economic Policies Book Series, in: Ricardo Caballero & César Calderón & Luis Felipe Céspedes & Norman Loayza (Series Editor) & Klaus Sc (ed.),External Vulnerability and Preventive Policies, edition 1, volume 10, chapter 5, pages 109-170, Central Bank of Chile.
    3. Cristina Betancour & José De Gregorio & Juan Pablo Medina, 2008. "The "great moderation" and the monetary transmission mechanism in Chile," BIS Papers chapters, in: Bank for International Settlements (ed.), Transmission mechanisms for monetary policy in emerging market economies, volume 35, pages 159-178, Bank for International Settlements.
    4. Medina, Juan Pablo & Toni, Emiliano & Valdes, Rodrigo, 2023. "The Art and Science of Monetary and Fiscal Policies in Chile," MPRA Paper 117198, University Library of Munich, Germany, revised 28 Apr 2023.
    5. Jose De Gregorio, 2004. "Economic Growth in Chile: Evidence, Sources and Prospects," Working Papers Central Bank of Chile 298, Central Bank of Chile.
    6. Rageh, Rania, 2010. "Interest rate rule for the conduct of monetary policy: analysis for Egypt (1997:2007)," MPRA Paper 26639, University Library of Munich, Germany.
    7. Tenreyro, Silvana & Drechsel, Thomas & McLeay, Michael, 2019. "Monetary policy for commodity booms and busts," CEPR Discussion Papers 14030, C.E.P.R. Discussion Papers.
    8. Rodrigo Valdés, 2007. "Inflation Targeting in Chile: Experience and Selected Issues," Economic Policy Papers Central Bank of Chile 22, Central Bank of Chile.

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    More about this item

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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