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Policy Responses to External Shocks: The Experiences of Australia, Brazil and Chile

  • Luis Felipe Céspedes
  • Ilan Goldfajn
  • Phil Lowe
  • Rodrigo Valdés

Open economies, particularly emerging markets and commodity-intensive economies, deal with large external shocks. Interestingly enough, policy reactions and policy set-ups may dampen or amplify the consequences of these shocks, affecting the magnitude of the shock. This paper revisits the recent experience of policy frameworks and reactions in three countries: Australia, Brazil and Chile. In particular, we analyse and evaluate alternative policy set-ups and policy reactions to the Asian crisis in the period 1997-98, and to the lower world growth and higher risk aversion in 2001-2002.

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Paper provided by Central Bank of Chile in its series Working Papers Central Bank of Chile with number 321.

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Date of creation: May 2005
Date of revision:
Handle: RePEc:chb:bcchwp:321
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  1. Ricardo Caballero & Kevin Cowan & Jonathan Kearns, 2004. "Fear of Sudden Stops: Lessons from Australia and Chile," NBER Working Papers 10519, National Bureau of Economic Research, Inc.
  2. Ilan Goldfajn & Sérgio Ribeiro da Costa Werlang, 2000. "The Pass-through from Depreciation to Inflation: A Panel Study," Working Papers Series 5, Central Bank of Brazil, Research Department.
  3. Corrinne Ho & Robert N. McCauley, 2003. "Living with flexible exchange rates: issues and recent experience in inflation targeting emerging market economies," BIS Working Papers 130, Bank for International Settlements.
  4. Ricardo Hausmann & Ugo Panizza & Ernesto H. Stein, 2000. "Why Do Countries Float the Way They Float?," Research Department Publications 4205, Inter-American Development Bank, Research Department.
  5. Klaus Schmidt-Hebbel & Matías Tapia, 2002. "Monetary Policy Implementation and Results in Twenty Inflation-Targeting Countries," Working Papers Central Bank of Chile 166, Central Bank of Chile.
  6. Klaus Schmidt-Hebbel & Alejandro M. Werner, 2002. "Inflation Targeting in Brazil, Chile, and Mexico: Performance, Credibility, and the Exchange Rate," ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, January.
  7. Matías Tapia & Andrea Tokman, 2004. "Effects of Foreign Exchange Intervention Under Public Information: the Chilean Case," Working Papers Central Bank of Chile 255, Central Bank of Chile.
  8. Felipe Morandé L. & Matías Tapia G., 2002. "Exchange Rate Policy in Chile: the Abandonment of the Band and the Floating Experience," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 5(3), pages 67-94, December.
  9. Mario Marcel C. & Marcelo Tokman R. & Rodrigo Valdés P. & Paula Benavides S., 2001. "Structural budget balance: the pilar of the new chilean fiscal policy rule," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 4(3), pages 15-27, December.
  10. Vittorio Corbo, 1998. "Reaching One-Digit Inflation: The Chilean Experience," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 123-163, November.
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