Fiscal Policy for Commodity Exporting Countries: Chile's Experience
Fiscal policy regimes based on a developed fiscal institutions and fiscal rules are increasingly adopted by governments that aim at stronger fiscal policy sustainability, more output stability, and more resilience of public finances to political pressure. This paper describes and evaluates fiscal policy institutions and particularly the fiscal rule in Chile. This commodity-exporting country is unique by having in place since 2001 a cyclically-adjusted government balance rule that takes account of both GDP shocks and mineral export price shocks. The paper starts by assessing the overall institutional set-up for fiscal policy in Chile in international comparison. Then it focuses on the fiscal rule, its changes over time, and its budgetary consequences and macroeconomic effects. By and large, the rule is found to have contributed to fiscal sustainability and credibility, and to macroeconomic stability. Yet the rule also presents shortcomings in its institutional set-up and application to the budget. Therefore the paper presents proposals for reform, following the recommendations made by the Advisory Council for the Design of Fiscal Policy in early 2011. The final section of the paper draws policy lessons from international experience and the Chilean case on institutional reform of fiscal policy and adoption of fiscal rules in commodity-exporting countries.
|Date of creation:||2012|
|Date of revision:|
|Contact details of provider:|| Postal: Avda. Vicuña Mackenna 4860, Macul, Santiago|
Phone: (562) 354-4303
Fax: (562) 553-1664
Web page: http://www.economia.uc.cl
More information through EDIRC
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.:
- Leandro Medina & Carlos Caceres & Ana Corbacho, 2010. "Structural Breaks in Fiscal Performance; Did Fiscal Responsibility Laws Have Anything to Do with Them?," IMF Working Papers 10/248, International Monetary Fund.
- Petra M. Geraats, 2008. "ECB Credibility and Transparency," European Economy - Economic Papers 2008 - 2015 330, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
- Xavier Debrun & Manmohan S. Kumar, 2007. "The Discipline-Enhancing Role of Fiscal Institutions; Theory and Empirical Evidence," IMF Working Papers 07/171, International Monetary Fund.
- Alberto Alesina & Silvia Ardagna & Roberto Perotti & Fabio Schiantarelli, 2002.
"Fiscal Policy, Profits, and Investment,"
American Economic Review,
American Economic Association, vol. 92(3), pages 571-589, June.
- Alberto Alesina & Silvia Ardagna & Roberto Perotti & Fabio Schiantarelli, 1999. "Fiscal Policy, Profits, and Investment," NBER Working Papers 7207, National Bureau of Economic Research, Inc.
- Schiantarelli, Fabio & Perotti, Roberto & Ardagna, Silvia & Alesina, Alberto, 2002. "Fiscal Policy, Profits, and Investment," Scholarly Articles 4685103, Harvard University Department of Economics.
- Alberto Alesina & Silvia Ardagna & Roberto Perotti & Fabio Schiantarelli, 2000. "Fiscal Policy, Profits, and Investment," Boston College Working Papers in Economics 504, Boston College Department of Economics.
- Alesina, Alberto F & Ardagna, Silvia & Perotti, Roberto & Schiantarelli, Fabio, 1999. "Fiscal Policy, Profits and Investment," CEPR Discussion Papers 2250, C.E.P.R. Discussion Papers.
- Ethan Ilzetzki & Carlos A. Vegh, 2008. "Procyclical Fiscal Policy in Developing Countries: Truth or Fiction?," NBER Working Papers 14191, National Bureau of Economic Research, Inc.
- Xavier Debrun & Keiko Takahashi, 2011. "Independent Fiscal Councils in Continental Europe: Old Wine in New Bottles?," CESifo DICE Report, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 9(3), pages 44-50, October.
- Eric M. Leeper, 2009.
"Anchoring Fiscal Expectations,"
Caepr Working Papers
2009-015, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.
- Petra M. Geraats & Sylvester C.W. Eijffinger & Carin A.B. van der Cruijsen, 2006.
"Does Central Bank Transparency Reduce Interest Rates?,"
DNB Working Papers
085, Netherlands Central Bank, Research Department.
- Eijffinger, Sylvester C W & Geraats, Petra M & van der Cruijsen, Carin A B, 2006. "Does Central Bank Transparency Reduce Interest Rates?," CEPR Discussion Papers 5526, C.E.P.R. Discussion Papers.
- Geraats, P. & Eijffinger, S.C.W. & van der Cruijsen, C.A.B., 2006. "Does Central Bank Transparancy Reduce Interest Rates?," Discussion Paper 2006-11, Tilburg University, Center for Economic Research.
- Alberto Alesina & Roberto Perotti, 1996.
"Budget Deficits and Budget Institutions,"
IMF Working Papers
96/52, International Monetary Fund.
- Xavier Debrun & David Hauner & Manmohan S. Kumar, 2009. "Independent Fiscal Agencies," Journal of Economic Surveys, Wiley Blackwell, vol. 23(1), pages 44-81, 02.
- César Calderón & Roberto Duncan & Klaus Schmidt-Hebbel., 2010. "Institutions and Cyclical Properties of Macroeconomic Policies in the Global Economy," Documentos de Trabajo 372, Instituto de Economia. Pontificia Universidad Católica de Chile..
- 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.
- Larraín B., Felipe & Parro, Francisco, 2008. "Chile menos volátil," El Trimestre Económico, Fondo de Cultura Económica, vol. 0(299), pages 563-596, julio-sep.
- Xavier Debrun & Laurent Moulin & Alessandro Turrini & Joaquim Ayuso-i-Casals & Manmohan S. Kumar, 2008. "Tied to the mast? National fiscal rules in the European Union," Economic Policy, CEPR;CES;MSH, vol. 23, pages 297-362, 04.
When requesting a correction, please mention this item's handle: RePEc:ioe:doctra:415. 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: (Jaime Casassus)
If references are entirely missing, you can add them using this form.