How private investment reacts to changing macroeconomic conditions : the case of Chile in the 1980s
AbstractThis paper simulates a model of joint determination of private investment spending, aggregate investment profitability and the level of GDP for Chile. It addresses the following issues: (a) sharp cycles in economic activity - the boom of 1980-81, the steep recession of 1982-83, and the recovery afterward which increased the volatility of aggregate demand and discouraged investment; (b) sharp swings in the real exchange rate and real interest rates in the last decade which increased the variance of profitability causing an adverse effect on investment; (c) high real interest rates which restrained private investment; and (d) real appreciation and depreciation.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 212.
Date of creation: 31 Dec 1989
Date of revision:
Economic Theory&Research; Environmental Economics&Policies; Macroeconomic Management; International Terrorism&Counterterrorism; Economic Stabilization;
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