La MisiÃ³n Klein-Saks, los Chicago Boys y la PolÃtica EconÃ³mica
AbstractPresident Carlos IbÃ¡Ã±ez del Campo came into power in 1952 to restore price stability and to end corruption. Soon, however, inflation was running at about 80 per cent per year and government invited Klein-Saks, the prestigious U.S. based consulting firm, to design and implement an anti-inflationary program. The Klein-Saks mission, after some initial studies, concluded that major economic structural reforms were necessary to bring inflation under control and to increase the rate of economic growth. Government accepted the proposed package and reforms were initiated. However, about a year and a half later, broad political opposition to these reforms induced government to cancel the contract with Klein-Saks, in spite of the fact that inflation had been drastically reduced. Soon the reform process was also abandoned and in some areas, even reversed. Decades after the Klein-Saks attempt and starting in late 1973, when inflation run at about 500 per cent and GDP was falling, were the military able to implement Â–this time under the guidance of the Chicago Boys- a coherent market system in Chile, not too different from that envisioned by Klein-Saks in the mid 1950Â´s. Good luck, political liberalization, and the economic institutions created under the military are today credited with the relatively high economic growth rates and price stability of Chile. This paper (a) compares the economic reform packages of the IbÃ¡Ã±ez (Klein-Saks) and Pinochet (Chicago Boys) administrations, to identify main similarities and differences between those two programs; (b) carries-out a counterfactual exercise to quantify welfare cost of not having implemented the Klein-Saks program in the mid fifties; and (c) attempts to explain the political economy of the reforms in one and the other case.
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Bibliographic InfoPaper provided by Instituto de Economia. Pontificia Universidad Católica de Chile. in its series Documentos de Trabajo with number 411.
Date of creation: 2012
Date of revision:
Economic history; Chile; anti-inflationary program; Klein-Saks mission; Chicago Boys;
Find related papers by JEL classification:
- N16 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Latin America; Caribbean
- N36 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Latin America; Caribbean
- O43 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
- O54 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
- P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
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