In 1975 Chile implemented an ortodox stabilization program. The fiscal deficit was sharply reduced and monetary policy was tight. However, indexation of wages and the exchange rate to past inflation implied that inflation only gradually declined. In fact,

This paper investigates the short run effect of a change in the relative price of imports to exports, in a context of specific capital and labor movement subject to adjustment costs. We present a graphical and mathematical (dynamic) analysis of the adjust

In this paper we study the heterodox stabilization plans of Argentina 1985 (Plan Austral) and Brazil 1986 (Plan Cruzado). Both plans considered that the main cause of inflation was inertia, due to indexation of wages, exchange rates and financial instrume

For policy makers and business cycles analysts is important to count on variables that anticipate points of inflection in economic activity. This paper studies aggregate real money balances as leader indicator of the economic activity based on a Probit mo

This paper identifies the dynamic effects of fiscal policy on economic activity (GDP) in the Chilean economy. We use a structural vector autoregression (SVAR) methodology. The main results are: a positive fiscal expenditure shock has a negative effect on

In this paper the role of external shocks to the Chilean economy is investigated. The empirical evidence indicates that a deterioration of the terms of trade, is the main fact explaining the decline of GDP from trend.

The purpose of this paper is to introduce rational expectations in the empirical analysis of the demand for money. With quarterly data, from 1975 to 1981, a demand for money is estimated, using a variant of rational expectations to construct expected infl