Financial frictions have been shown to play an important role amplifying business cycles fluctuations. In this paper we show that the financial accelerator mechanism, analyzed by Bernanke, Gertler and Gilrchrist (1999), combined with adaptive learning can amplify business cycle fluctuations...

In this paper we develop an alternative Taylor rule where the level of inertia depends on the gap between the actual and desired interest rates. This rule is estimated for six inflation-targeting countries, namely Chile, Colombia, Mexico, New Zealand, Peru, and South Korea. Evidence of a varying...

In this paper we study several elements that allow us to explain the greater resilience of household credit markets in emerging economies, and particularly in Chile during the international financial crisis of 2008-2009. The main features identified are primarily related to the development...

A recent strand of research proposes that sudden jumps in uncertainty generate rapid drops and recoveries in real macroeconomic variables that drive the business cycle. Using an empirical model, we find substantial heterogeneity in the reactions to these shocks across countries. In comparison to...

In this paper we estimate the impact of global uncertainty shocks –identified as sudden jumps in U.S. stock market volatility– on certain sectors of the Chilean economy. Using a reduced-form VAR approach, we estimate that uncertainty shocks generate a fall in GDP of 1.7% with respect to...

We explore the ability of several univariate models to predict inflation in a number of countries and at several forecasting horizons. We place special attention on forecasts coming from a family of ten seasonal models that we call the Driftless Extended Seasonal ARIMA (DESARIMA) family. Using...

Kristin Forbes and Francis Warnock's "Capital Flow Waves: Surges, Stops, Flight, and Retrenchment," in Journal of International Economics (forthcoming) identifies episodes of extreme capital flow movements—surges, stops, flight, and retrenchment—and finds that global factors, especially...