Historically, many countries have suffered a pattern of procyclical fiscal policy: spending too much in booms and then forced to cut back in recessions, thereby exacerbating the business cycle. This problem has especially plagued Latin American commodity-producers. Since 2000, fiscal policy in...

In this paper we discuss the arguments for and against the adoption of price-level targeting. We review recent theoretical contributions, and illustrate the main differences between price-level targeting and inflation targeting in a simple New Keynesian model. We conclude that, contrary to...

The paper analyzes Chile’s structural surplus fiscal rule in the face of shocks to the world copper price. Two results are obtained. First, Chile’s current fiscal rule performs well if the policymaker (i) puts a premium on avoiding excessive volatility in fiscal instruments, and (ii) puts a...

Trade data shows that real exchange rate fluctuates more than other variables such as consumption and GDP, and also presents significant deviations from the Law of One Price. In light of these facts, this paper develops and estimates a non-monetary DSGE model under financial autarky for...

Using a large dataset of countries, covering the period 1962-2000, this paper analyzes the main determinants of export diversification (concentration). We explore the role of several factors and we use three different indicators of export concentration. We find robust evidence across...