This paper uses an open economy DSGE model with a commodity sector and nominal and real rigidities to ask what factors account for current account developments in two small commodity exporting countries. We estimate the model, using Bayesian techniques, on Chilean and on New Zealand data, and...

This paper empirically evaluates the importance of exchange rate regimes and exchange rate volatility on interest rate differentials, with special reference to Chile. We estimate risk-premia for 16 country experiences with different exchange rate regimes and then investigate whether these premia...

This paper presents new sector saving series for Chile. The annual series for 1960-1997 are disaggregated by six sectors: external sector, general government, public enterprises, central banks, private firms, and households. Household saving is disaggregated into mandatory pension saving and...

This paper analyzes the positive and normative implications of the degree of openness of a small economy for the transmission mechanism of monetary shocks. First, we show empirical evidence on the direct relationship between openness and the degree of exchange rate pass-through. Then, we develop...

This paper documents the empirical regularities characterizing business cycles in Chile in a wide range of economic activities. While the country presents many of the typical features of business fluctuations in OECD countries, Chilean cycles present some striking peculiarities. Trade represents...

Under a flexible exchange rate regime international reserves contribute to reducing the risk of a financial crisis, and allow the monetary authority to exceptionally intervene in the exchange market. However, holding reserves is costly. In this paper, we analyze several issues concerning the...

Using a sticky price model for small open economy this paper compares the consequences of two alternative monetary policies over a set of variables. The baseline case assumes a policy rule for the Central Bank that has inflation forecast and output as a target. The alternative policy is a rule...