Banco Central de ChileRevista Economía Chilena
Published Issues
Volume 1 Nº 1 August 1998
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| Articles |
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| Monetary Policy in Chile Carlos Massad This paper reviews the most important aspects of monetary policy implemented by the Central Bank of Chile since 1990, with special emphasis on its success in achieving lower inflation during this period. Monetary policy in Chile is based on an inflation target and its primary aim is to achieve industrial-country inflation levels. Policy continuity and the independence and credibility of the monetary authority have been key factors in allowing the economy to get close to this objective. The analysis of this policy framework and the macroeconomic performance leads to the conclusion that inflation reduction has not has not caused any significant increase in production and employments costs. The paper ends by discussing some of the remaining challenges facing monetary policy in Chile. |
| Inflation and Inflation Uncertainty in Chile Igal Magendzo A large part of the literature on the costs of inflation suggests that the most adverse effects arise from the inability of agents in predicting inflation. This paper evaluates whether inflation uncertainty is related to the level of inflation in Chile. Using time-series techniques, the paper constructs an inflation uncertainty measure and investigates its relation with actual inflation. It confirms the correlation between rising inflation and inflation uncertainty and that inflation precedes uncertainly. The evidence reported here shows that inflation uncertainty has decreased persistently since 1993, currently attaining the lowest levels in Chilean history since 1934. The paper concludes that a key benefit from controlling inflation in Chile has been the reduction in inflation uncertainty. |
| Substitution Bias in the Consumer Price Index Fernando Lefort The paper presents a revision of different inflation measurement biases with emphasis on the so-called substitution bias. This bias arises because the usual indices (such as the Laspeyres index applied to the measurement of the CPI) assume absence of substitution between goods in response to price changes. This rigidity would cause an overestimation of the true cost incurred in attaining a constant utility level. Then the paper presents the first estimation of this bias for the case of Chile. The results indicate that this bias is approximately equal to an average 0.8 % per year during 1978-1989 and to an average 0.6 % per year during 1989-1997. |
| Research Notes |
| Nuevas prácticas de proteccionismo en el mundo, editado por Ronald Fischer Dominique Hachette Análisis empírico del crecimiento en Chile, editado por Felipe Morandé y Rodrigo Vergara Franciso Rosen |
| Publications Review |