When the monetary authority lacks credibility it faces a larger trade-off between output and inflation. This poses important challenges for the implementation and design of an inflation targeting regime and an inflation stabilization process. In this paper we show how these challenges have...

This paper provides an empirical evaluation of the influence of external conditions and international integration on growth performance, using panel methods for a large cross-country data set. Controlling for domestic conditions, the paper examines the growth effects of trade and financial...

This paper studies the existence of contagion in Chile, using data of the sovereign debt spread for the period 1999-2006. Although we found a strong degree of interdependence between the Chilean series and the rest of the region, we reject the hypothesis of contagion from Brazil to Chile for the...

In light of ongoing concern about commodity specialization in Latin America, this paper revisits the argument of Prebisch (1950) that, over the long term, declining terms of trade would frustrate the development goals of the region. This paper has two main objectives. The first is to clarify the...

How should a central bank organize itself to produce the best possible inflation forecast? This paper discusses elements for building a comprehensive platform for an inflation forecasting framework. It describes the exercise of forecasting inflation as a production process, which induces a...

This paper tests a specific channel through which institutions affect output per capita: the role of institutions in firm-level division of production. We argue that weaker institutions increase transaction costs, including those incurred by a firm when dealing with suppliers of intermediate...

This paper discusses the implications on sector growth within the context of a specialization model based on factor endowment. The empirical literature is examined, which reveals that the only way for the economy to alter its specialization patterns toward the production of goods that are...

An important condition for convergence is that countries share the same technology for the aggregate production function (Solow, 1956). If countries produce a different mix of products, however, they will have a different aggregate production function. We argue that the inclusion of a fixed...

The empirical literature on long-run real exchange rate behavior has shown mixed evidence due to problems involving the lack of long time series data and the low power of time-series unit root tests in small samples. The main objective of the present paper is to tackle these empirical issues by...

The aim of this paper is to characterize the current Chilean scientific and technological status from an economic point of view. Given its present level of economic development, major weaknesses are observed in the National System of Innovation. Among them, scarce resources devoted to R&D...