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Chile menos volátil


  • Larraín B., Felipe

    (Instituto de Economía, Pontificia Universidad Católica de Chile)

  • Parro, Francisco

    (University of Chicago)


Between 1988 and 1998 Chile’s average economic growth reached 7.8%. Nonetheless, growth decelerated sharply after the Asian Crisis; since 1998 the average economic expansion was only 3.7%. Along with this deceleration, the volatility of the economy was cut by more that half. Using a formal empirical analysis, this paper investigates the role that adoption of both a floating exchange rate scheme and the use of the Structural Surplus Rule had in transforming Chile into a less volatile economy. Our results show that the introduction of the fiscal rule allowed for a reduction in the volatility of GDP growth by one third. On the other hand, the introduction of the flexible exchange rate mechanism contributed to reduce the volatility by one quarter. Thus, jointly, both policy reforms diminished the volatility of the Chilean economy by almost 60%. These results are robust to alternative specifications and possible endogeneity problems in some of the explanatory variables.// Desde fines de 1998 la economía chilena se desaceleró mucho. Si entre 1988 y 1998 la tasa de crecimiento promedio alcanzó un 7.8%, durante el período postcrisis asiática fue de sólo un 3.7%. Sin embargo, junto con la desaceleración del crecimiento, la volatilidad de la economía se redujo prácticamente a la mitad.Este trabajo investiga, mediante un análisis empírico formal, el papel que tuvieron la introducción de la flotación cambiaria y la utilización de la regla de superávit estructural en transformar a Chile en una economía menos volátil. Nuestros resultados muestran que la introducción de la regla fiscal parece haber reducido en un tercio la volatilidad del crecimiento del PIB. Por su parte, la flotación cambiaria contribuyó a reducir esa volatilidad adicionalmente en alrededor de un cuarto. Así, en conjunto, ambas medidas aparecen como responsables de haber disminuido la volatilidad del crecimiento de la economía chilena en casi 60%. Estos resultados son robustos ante especificaciones y posibles problemas de endogeneidad en algunas de las variables explicativas.

Suggested Citation

  • Larraín B., Felipe & Parro, Francisco, 2008. "Chile menos volátil," El Trimestre Económico, Fondo de Cultura Económica, vol. 0(299), pages 563-596, julio-sep.
  • Handle: RePEc:elt:journl:v:75:y:2008:i:299:p:563-596

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    Cited by:

    1. Juan Carlos Chávez Martín del Campo & Ricardo Rodríguez Vargas & Felipe de Jesús Fonseca Hernández, 2010. "Vacas gordas y vacas flacas: la política fiscal y el balance estructural en México, 1990-2009," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 25(2), pages 309-336.
    2. Ryszard Piasecki & Erico Wulf B, 2014. "Fiscal Policy Rules: Evidence From Chilean Economy," Review of Business and Finance Studies, The Institute for Business and Finance Research, vol. 5(2), pages 45-54.
    3. Juan A. Correa & Christian Ferrada & Pablo Gutiérrez & Francisco Parro, 2014. "Effects of fiscal policy on private consumption: evidence from structural-balance fiscal rule deviations," Applied Economics Letters, Taylor & Francis Journals, vol. 21(11), pages 776-781, July.
    4. Jeffrey Frankel, 2013. "A Solution to Fiscal Procyclicality: The Structural Budget Institutions Pioneered by Chile," Central Banking, Analysis, and Economic Policies Book Series, in: Luis Felipe Céspedes & Jordi Galí (ed.), Fiscal Policy and Macroeconomic Performance, edition 1, volume 17, chapter 9, pages 323-391, Central Bank of Chile.
    5. Luis Felipe Céspedes & Eric Parrado & Andrés Velasco, 2014. "Fiscal Rules and the Management of Natural Resource Revenues: The Case of Chile," Annual Review of Resource Economics, Annual Reviews, vol. 6(1), pages 105-132, October.
    6. Klaus Schmidt-Hebbel, 2012. "Fiscal Institutions in Resource-Rich Economies: Lessons from Chile and Norway," Working Papers 682, Economic Research Forum, revised 2012.
    7. José De Gregorio & Felipe Labbé, 2011. "Copper, the Real Exchange Rate and Macroeconomic Fluctuations in Chile," Working Papers Central Bank of Chile 640, Central Bank of Chile.
    8. Klaus Schmidt-Hebbel, 2012. "Fiscal Policy for Commodity Exporting Countries: Chile's Experience," Documentos de Trabajo 415, Instituto de Economia. Pontificia Universidad Católica de Chile..
    9. Castillo, Paul & Montoya, Jimena & Quineche, Ricardo, 2016. "From the “Great Inflation” to the “Great Moderation” in Peru: A Time Varying Structural Vector Autoregressions Analysis," Working Papers 2016-003, Banco Central de Reserva del Perú.
    10. Villena, Mauricio G. & Gamboni, Cristóbal & Tomaselli, Andrés, 2018. "Fiscal sustainability and the cyclically adjusted balance policy: methodology and analysis for Chile," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.

    More about this item


    volatility of growth; business cycle; stabilization; volatilidad del crecimiento; ciclo económico; estabilización;

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy


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