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Central Bank Autonomy: The Chilean Experience

  • Luis Felipe Céspedes C.
  • Rodrigo Valdés P.

A selective revision to the theoretical and empirical literature on macroeconomic performance and central bank autonomy, yields new evidence of the relationship between the latter and the passthrough coefficient from the exchange rate to inflation. An analysis follows, from diverse viewpoints, to the way central bank autonomy has worked in practice in Chile, what were the issues being debated at the beginning and how they have unfolded later. The Central Bank of Chile’s (CBC) autonomy is then compared with that of other central banks, discussing the role of central banks’ capital. The conclusion from the analysis is that the CBC’s experience with autonomy has had very positive results.

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File URL: http://www.bcentral.cl/estudios/revista-economia/2006/abr/Vol9N1abr2006pp25_47.pdf
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Article provided by Central Bank of Chile in its journal Economía Chilena.

Volume (Year): 9 (2006)
Issue (Month): 1 (April)
Pages: 25-47

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Handle: RePEc:chb:bcchec:v:9:y:2006:i:1:p:25-47
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  1. Michael B. Devereux & Charles Engel & Peter E. Storgaard, 2002. "Endogenous Exchange Rate Pass-Through When Nominal Prices are Set in Advance," Working Papers 212002, Hong Kong Institute for Monetary Research.
  2. Alesina, Alberto & Summers, Lawrence H, 1993. "Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 25(2), pages 151-62, May.
  3. Herman Bennett & Norman Loayza, 2000. "Policy Biases when the Monetary and Fiscal Authorities have Different Objectives," Working Papers Central Bank of Chile 66, Central Bank of Chile.
  4. Calderon, Cesar & Schmidt-Hebbel, Klaus, 2003. "Macroeconomic policies and performance in Latin America," Journal of International Money and Finance, Elsevier, vol. 22(7), pages 895-923, December.
  5. Alan S. Blinder, 1999. "Central Bank Credibility: Why Do We Care? How Do We Build It?," NBER Working Papers 7161, National Bureau of Economic Research, Inc.
  6. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-91, June.
  7. Nicolás Eyzaguirre & Rodrigo Vergara, 1993. "Reflexiones en Torno a la Experiencia de Autonomía del Banco Central de Chile," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 30(91), pages 327-348.
  8. Roberto Zahler, 1989. "La Inserción Institucional del Banco Central de Chile," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 26(77), pages 97-114.
  9. Francisco Rosende, 1989. "Elementos para el Diseño de un Marco de Análisis de la Autonomía del Banco Central," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 26(77), pages 25-38.
  10. Guy Debelle & Stanley Fischer, 1994. "How independent should a central bank be?," Working Papers in Applied Economic Theory 94-05, Federal Reserve Bank of San Francisco.
  11. Cukierman, Alex & Webb, Steven B & Neyapti, Bilin, 1992. "Measuring the Independence of Central Banks and Its Effect on Policy Outcomes," World Bank Economic Review, World Bank Group, vol. 6(3), pages 353-98, September.
  12. Francisco Rosende, 1993. "La Autonomía del Banco Central de Chile: Una Evaluación Preliminar," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 30(91), pages 293-326.
  13. Bindseil, Ulrich & Manzanares, Andrés & Weller, Benedict, 2004. "The role of central bank capital revisited," Working Paper Series 0392, European Central Bank.
  14. Daniel Tapia, 1993. "Experiencia del Banco Central Autónomo," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 30(91), pages 349-356.
  15. Peter Stella, 1997. "Do Central Banks Need Capital?," IMF Working Papers 97/83, International Monetary Fund.
  16. Claudia Helene Dziobek & John W. Dalton, 2005. "Central Bank Losses and Experiences in Selected Countries," IMF Working Papers 05/72, International Monetary Fund.
  17. José Pablo Arellano, 1989. "Comentarios al Proyecto de Ley del Banco Central," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 26(77), pages 91-96.
  18. Rogoff, Kenneth, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, MIT Press, vol. 100(4), pages 1169-89, November.
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