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...

This paper develops time series models that incorporate mixed-frequency data of prices in order to yield a real-time forecast of the inflation of some CPI components in Chile. Specifically, the models use weekly prices obtained from the two main Chilean supermarket chains, in addition to...

This document proposes that the social capital (Cs) and its interaction with the income distribution (DI), in specific the GINI index, are key to understanding the relationship between a country’s DI and rate of output growth (TC). The hypothesis is that, in the short term, it is the level and...

In this paper I study a new business cycle fact recently documented by Bachmann and Bayer (2011): the dispersion of the distribution of investment rates across firms is procyclical. Using data from German firm, the authors find a correlation coefficient between the standard deviation of...

The financial crisis of 2008, the subsequent fiscal stimulus, and damage to the fiscal position –especially in the developed countries—, raised the concerns about their impact on long-term interest rates. Using a stylized model, we establish the link between long-term interest rates and the...

This paper examines the impact of the copper price on macroeconomic performance in Chile. We explore particular features of the Chilean business cycle focusing on economic activity and the real exchange rate. We find that the Chilean economy has become increasingly resilient to copper price...

An important consequence of the recent financial crisis was the collapse of global trade. Using data of Chilean exporting firms, this paper studies the effect of financial constraints on export growth in the aftermath of the crisis. Our results show that both overall financing and export credit...

Bailout policy is time-inconsistent, which results in multiple equilibria characterized by too much leverage, high risk correlation and little liquidity holding. I show that a long-run horizon allows the policy-maker to define bailout plans that rule out the worse equilibria. This result...