Growth and Adjustment in Chile: A Look at the 1990s
In: Economic Growth: Sources, Trends, and Cycles
This study provides a thorough review of the post-1998 slowdown in economic growth in Chile. This was a rather turbulent period in economic history, and as such, it motivates to carry on research on the likely causes of the slowdown and its possible solutions. The authors use an econometric model to test three competing hypotheses and derive general implications from the analysis. The first hypothesis puts the blame on bad luck, because of external shocks: namely, terms-of-trade losses and reduced capital inflows following the Asian crisis. A second hypothesis blames the slowdown on policies implemented as a response to the deteriorating external conditions, in particular the inability to achieve a balanced mix of monetary and fiscal policies during the 1997–1998 period. Fiscal imbalances and restrictive monetary policy, it is argued, led to very high interest rates, severely affecting the investment and consumption decisions of the private sector. Finally, a third explanation is that the lowdown resulted from the completion of a high growth cycle associated with the structural reforms introduced in the 1985–1995 period. The authors conclude that the slowdown in the Chilean economy was a mix of severe external shocks and lack of cooperation between fiscal and monetary policies.
(This abstract was borrowed from another version of this item.)
|This chapter was published in: Norman Loayza & Raimundo Soto & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Editor) (ed.) Economic Growth: Sources, Trends, and Cycles, , chapter 14, pages 465-522, 2002.|
|This item is provided by Central Bank of Chile in its series Central Banking, Analysis, and Economic Policies Book Series with number v06c14pp465-522.|
|Contact details of provider:|| Postal: Casilla No967, Santiago|
Phone: (562) 670 2000
Fax: (562) 698 4847
Web page: http://www.bcentral.cl/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- David Hargreaves, 1999. "SDS-FPS: a small demand-side version of the Forecasting and Policy System core model," Reserve Bank of New Zealand Discussion Paper Series G99/10, Reserve Bank of New Zealand.
- Robert J. Barro, 2012.
"Inflation and Economic Growth,"
CEMA Working Papers
568, China Economics and Management Academy, Central University of Finance and Economics.
- Meller, Patricio & O'ryan, Raul & Solimano, Andres, 1996. "Growth, equity, and the environment in Chile: Issues and evidence," World Development, Elsevier, vol. 24(2), pages 255-272, February.
- Athanasios Orphanides, 2001.
"Monetary Policy Rules Based on Real-Time Data,"
American Economic Review,
American Economic Association, vol. 91(4), pages 964-985, September.
- Obstfeld, Maurice, 1996.
"Models of currency crises with self-fulfilling features,"
European Economic Review,
Elsevier, vol. 40(3-5), pages 1037-1047, April.
- Maurice Obstfeld, 1995. "Models of Currency Crises with Self-Fulfilling Features," NBER Working Papers 5285, National Bureau of Economic Research, Inc.
- Obstfeld, Maurice, 1996. "Models of Currency Crises with Self-fulfilling Features," CEPR Discussion Papers 1315, C.E.P.R. Discussion Papers.
- Stanley Fischer, 1993.
"The Role of Macroeconomic Factors in Growth,"
NBER Working Papers
4565, National Bureau of Economic Research, Inc.
- Richard H. Clarida & Jordi Gali & Mark Gertler, 1998. "Monetary policy rules in practice," Proceedings, Federal Reserve Bank of San Francisco, issue Mar.
- Meredith Beechey & Nargis Bharucha & Adam Cagliarini & David Gruen & Christopher Thompson, 2000. "A Small Model of the Australian Macroeconomy," RBA Research Discussion Papers rdp2000-05, Reserve Bank of Australia.
- Shamik Dhar & Darren Pain & Ryland Thomas, 2000. "A small structural empirical model of the UK monetary transmission mechanism," Bank of England working papers 113, Bank of England.
- Juan Andrés Fontaine, 1991. "La Administración de la Política Monetaria en Chile, 1985-89," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 28(83), pages 109-130.
- Vittorio Corbo & Klaus Schmidt-Hebbel, 2001.
"Inflation Targeting in Latin America,"
Working Papers Central Bank of Chile
105, Central Bank of Chile.
- Francisco A. Gallego & F. Leonardo Hernández, 2003.
"Microeconomic effects of capital controls: The chilean experience during the 1990s,"
International Journal of Finance & Economics,
John Wiley & Sons, Ltd., vol. 8(3), pages 225-253.
- Francisco A. Gallego F & Leonardo Hernández, 2003. "Microeconomic Effects of Capital Controls: The Chilean Experience During the 1990s," Working Papers Central Bank of Chile 203, Central Bank of Chile.
- Kenneth Rogoff, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, Oxford University Press, vol. 100(4), pages 1169-1189.
- Marcel, Mario, 2001.
"Balance Estructural del Gobierno Central. Metodología y Estimaciones para Chile
[Structural Bazlance of Central Government. Methodology and estimates for Chile]," MPRA Paper 43338, University Library of Munich, Germany.
- Taylor, John B., 2000. "Low inflation, pass-through, and the pricing power of firms," European Economic Review, Elsevier, vol. 44(7), pages 1389-1408, June.
When requesting a correction, please mention this item's handle: RePEc:chb:bcchsb:v06c14pp465-522. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Claudio Sepulveda)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.