We explore the role of fiscal policy over the business cycle from a normative perspective, for a government with a highly volatile and exogenous revenue source. Instead of resorting to Keynesian mechanisms, in our framework fiscal policy plays a role because the government provides transfers to...

Creation-DaThis brief review takes stock of the recent literature on current account and external financing and presents new analytical results and empirical research on the subject. Four key areas of related research are presented, namely global imbalances and macroeconomic adjustment; external...

Indexation is common practice in both developed and developing countries. During recent years, however, many less developed economies that have implemented relatively successful stabilization plans, have included as part of the reform package wage nominalization and/or the use of the exchange...

The Central Bank of Chile was granted full autonomy by a Constitutional Organic Law enacted in 1989. In this paper we conduct a selective review of theoretical and empirical literature on the macroeconomic performance and autonomy of the Central Bank, presenting new evidence of the relationship...

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 examines the growth and inflation forecasts contained in the Monetary Policy Reports (MPR) of the Central Bank of Chile, comparing them with private forecast, the forecasts made by the Bank during the previous decade, and the forecasts performed by other Central Banks that follow...

The purpose of this paper is twofold. First, we review the history of indexation in Chile since 1938. We focus on interpreting indexation in the historical, political, and economic context of different stages of Chilean economic development. Second, we analyze the experience of a selected group...

Tolerating some volatility in the rate of inflation leads the design of inflation target characteristics—in inflation-targeting economies—to reflect flexibility in four dimensions, namely: the price index that defines the target, the width of the target range, the midpoint of the monetary...

In this paper we empirically study bank-client relationships using a sample of Chilean manufacturing firms. We examine whether concentration and the duration of bank-firm relationships affect the volume of bank lending. Our results indicate that lower concentration, measured by the number of...