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Cuenta Corriente y Desvíos Transitorios en Términos de Intercambio y Volúmenes de Exportaciones: Chile 1985-1999

  • Jaime Guajardo
  • Guillermo Le Fort

To limit the risks of a sudden stop in external financing that would jeopardize intertemporal consumption smoothing, the current account deficit should be limited to sustainable levels. However, the volatility of the terms of trade and some export volumes cause difficulties in assessing a sustainable current account level. This paper provides a "trend indicator" for the current account based on "normalized" external prices and export volumes. Thus, the exercise allows evaluating, in a simple and timely fashion, whether the deficit level is sustainable and, if not, demand adjustment measures are needed to correct it.

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Paper provided by Central Bank of Chile in its series Working Papers Central Bank of Chile with number 49.

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Date of creation: Nov 1999
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Handle: RePEc:chb:bcchwp:49
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  1. Jeffrey J. Frankel and Andrew K. Rose., 1996. "Currency Crashes in Emerging Markets: Empirical Indicators," Center for International and Development Economics Research (CIDER) Working Papers C96-062, University of California at Berkeley.
  2. Maria Milesi-Ferretti, Gian & Razin, Assaf, 1998. "Sharp reductions in current account deficits An empirical analysis," European Economic Review, Elsevier, vol. 42(3-5), pages 897-908, May.
  3. Reinhart, Carmen & Wickham, Peter, 1994. "Commodity Prices: Cyclical Weakness or Secular Decline?," MPRA Paper 8173, University Library of Munich, Germany.
  4. Sheffrin, Steven M. & Woo, Wing Thye, 1990. "Present value tests of an intertemporal model of the current account," Journal of International Economics, Elsevier, vol. 29(3-4), pages 237-253, November.
  5. Guillermo A. Calvo, 1996. "Capital flows and macroeconomic management: tequila lessons," Working Papers in Applied Economic Theory 96-02, Federal Reserve Bank of San Francisco.
  6. Cashin, P. & McDermott, C.J., 1999. "Terms of Trade Shocks and the Current Account," Department of Economics - Working Papers Series 678, The University of Melbourne.
  7. Reinhart, Carmen & Borensztein, Eduardo, 1994. "The determinants of commodity prices," MPRA Paper 13870, University Library of Munich, Germany.
  8. Milesi-Ferretti, Gian Maria & Razin, Assaf, 1996. "Current Account Sustainability: Selected East Asian and Latin American Experiences," CEPR Discussion Papers 1509, C.E.P.R. Discussion Papers.
  9. Bernard Laurens & Jaime Cardoso, 1998. "Managing Capital Flows; Lessons From the Experience of Chile," IMF Working Papers 98/168, International Monetary Fund.
  10. Gian Maria Milesi Ferretti & Assaf Razin, 2000. "Current Account Reversals and Currency Crises: Empirical Regularities," NBER Chapters, in: Currency Crises, pages 285-323 National Bureau of Economic Research, Inc.
  11. Graciela Kaminsky & Saul Lizondo & Carmen M. Reinhart, 1998. "Leading Indicators of Currency Crises," IMF Staff Papers, Palgrave Macmillan, vol. 45(1), pages 1-48, March.
  12. Enrique G. Mendoza, 1992. "A Quantitative Examination of Current Account Dynamics in Equilibrium Models of Barter Economies," IMF Working Papers 92/14, International Monetary Fund.
  13. Atish R. Ghosh & Jonathan David Ostry, 1994. "Export Instability and the External Balance in Developing Countries," IMF Working Papers 94/8, International Monetary Fund.
  14. Hoffmaister, Alexander W. & Roldos, Jorge E., 2001. "The Sources of Macroeconomic Fluctuations in Developing Countries: Brazil and Korea," Journal of Macroeconomics, Elsevier, vol. 23(2), pages 213-239, April.
  15. Dean A. DeRosa, 1991. "Increasing Export Diversification in Commodity-Exporting Countries; A Theoretical Analysis," IMF Working Papers 91/105, International Monetary Fund.
  16. Milesi-Ferretti, G.M. & Razin, A., 1997. "Origins of Sharp Reductions in Current Account deficits: An Empirical Analysis," Papers 25-97, Tel Aviv.
  17. James M. Boughton, 1991. "Commodity and Manufactures Prices in the Long Run," IMF Working Papers 91/47, International Monetary Fund.
  18. Rudiger Dornbusch, 1985. "Policy and Performance Links between LDC Debtors and Industrial Nations," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 16(2), pages 303-368.
  19. Sachs, Jeffrey, 1982. " The Current Account in the Macroeconomic Adjustment Process," Scandinavian Journal of Economics, Wiley Blackwell, vol. 84(2), pages 147-59.
  20. Dominique Yves Dupont & V. Hugo Juan-Ramon, 1996. "Real Exchange Rates and Commodity Prices," IMF Working Papers 96/27, International Monetary Fund.
  21. Frenkel, Jacob A & Razin, Assaf, 1987. "Fiscal Policies and the World Economy; An Intertemporal Approach (Cambridge, Mass.: MIT Press, 1987)," MPRA Paper 20438, University Library of Munich, Germany.
  22. Jonathan David Ostry, 1997. "Current Account Imbalances in AsEAN Countries; Are they a Problem?," IMF Working Papers 97/51, International Monetary Fund.
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