The paper estimates a small open economy DSGE model, specified along the lines of Galí and Monacelli (REStud 2005) and Lubik and Schorfheide (JME 2007), on Chilean data for the full inflation targeting period (1999-2007). We study the specification of the policy rule followed by the Central...

We use comparable micro level panel data for 14 countries and a set of identically specified empirical models to investigate the relationship between exports and productivity. Our overall results are in line with the big picture that is by now familiar from the literature: Exporters are more...

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...

The literature on regional integration agreements (RIAs) is vast and deals with political, economic and political economy issues. The literature on the economics of RIAs deals mostly with static effects, and concludes that these effects are in general ambiguous. So far, there has been no...

High instability and low growth characterize the macroeconomic performance of most developing countries. Inadequate policies are often to blame. This paper documents the empirical regularities that characterize the relationship between macroeconomic-financial policies, instability, and growth...

This paper presents the evolution of Chilean intra-industry trade (IIT) from 1985 to 1996, and estimates it’s degree of horizontal and vertical differentiation. Additionally, using measures of intra-industry trade we estimate the participation of low adjustment cost trade in the growth of...

We construct performance-based measures of labor market rigidity considering an open economy framework. We derive and estimate an indicator that depends exclusively on the theoretical measure of unions' bargaining power, with which we rank a sample of 18 heterogeneous countries. The indicator is...

This paper demonstrates how regional trade agreements (RTAs) can lead to both foreign direct investment expansion and relocation effects. These two effects, in return, impact the endogenous formation of RTAs. The investment expansion effect results from foreign firms’ ability to serve a larger...

The role of an extra lender in the international markets – such the IMF or another similar institution - has been widely covered in academic discussions and among policy makers. However, there is neither a clear answer nor a consensus about its welfare consequences. On the one hand, it is...

The purpose of this paper is to determine the sources of Chilean growth in the 1960-96 period. Particularly, we seek to quantify the contribution of increased trade on growth. We also estimate potential output for the Chilean economy in the aforementioned period. The main results are that the...