In contrast to advanced markets (AMs), procyclical monetary policy has been a problem for emerging markets (EMs), with macroeconomic policies amplifying economic upswings and deepening downturns. The stark difference in policy has not been subject to extensive study and this paper attempts to...

KEY ISSUES<br>Politics: President Bachelet won the Presidential election on a platform to foster<br>inclusive growth and reduce inequality. Her government took office in March 2014 and is launching <br>an ambitious policy agenda that includes important reforms in several areas, including taxation,...

Output gap estimates are subject to a wide range of uncertainty owing to data revisions and the difficulty in distinguishing between cycle and trend in real time. This is important given the central role in monetary policy of assessments of economic activity relative to capacity. We show that...