Journal Economía Chilena (The Chilean Economy)

Articles
A Challenges of Economic Growth: an Overview Carlos Massad A. This article is part of the conference “The Challenges of Economic Growth” organized by the Central Bank of Chile in November 2001. It summarizes the development and the state of the art on economic growth literature and critically discusses the main theoretical and empirical insights provided by the papers presented at the conference.
Coping With Chile’s External Vulnerability: A Financial Problem Ricardo Caballero G. With traditional domestic imbalances long under control, the Chilean business cycle is driven by external shocks. Most importantly, Chile’s external vulnerability is primarily a financial problem. A decline in the Chilean termsof- trade, for example, is associated to a decline in real GDP that is many times larger than one would predict in the presence of perfect financial markets. The financial nature of this excess-sensitivity has two central dimensions: a sharp contraction in Chile’s access to international financial markets when it needs it the most; and an inefficient reallocation of this scarce access across domestic borrowers during external crises. In this paper I characterize this financial mechanism and argue that Chile’s aggregate volatility can be reduced significantly by fostering the private sector’s development of financial instruments that are contingent on Chile’s main external shocks. As a first step, the Central Bank or IFIs could issue a benchmark instrument contingent on these shocks. I also advocate a countercyclical monetary policy but mainly for incentive —that is, as a substitute for taxes on capital inflows and equivalent measures— rather than for ex-post liquidity purposes.
The Golden Period For Growth In Chile: Explanations And Forecasts Francisco Gallego Y. / Norman Loayza O. Economic growth in Chile since the mid 1980s has been remarkable for its high level and persistence. This paper explores the factors behind the high growth rates of the past 15 years and analyzes the extent to which they can be sustained in the future. The first part of the paper presents some stylized facts about growth in Chile. Taken together, they suggest that the jump in growth was driven by policies and macroeconomic conditions that affected the economy’s overall productivity. The second part of the paper considers the large body of recent empirical growth literature to examine the extent to which a cross-country approach can explain Chile’s growth performance. It formulates a basic regression model that contains the most popular variables in the growth literature and estimates it using techniques suited for dynamic models of panel data. The basic model allows us to explain about 45% of the change in the growth rate between 1970-1985 and 1986-1998, which was 4.74 percentage points. When we expand the basic model to include the quality of the political system and governance, the comprehensiveness and complementarity of policy reforms, and the availability of public services and infrastructure, we can explain 73% of the growth improvement. The last part of the paper starts the assessment of possible new growth sources for Chile by, first, projecting the country’s growth rate for the next 10 years under various assumptions and, second, proposing some areas with potentially large returns.
Research Notes
Promoviendo el Crecimiento en América Latina Anne Krueger
El Camino de las Reformas Jorge Marshall R.
El Desafío del Crecimiento Económico en Chile Francisco Rosende R.
Crecimiento Económico en Chile: Presente, Pasado y Futuro Jorge Rodríguez G.
Books review
The Elusive Quest for Growth. Economic Adventures and Misadventures in the Tropics de William Easterly Vittorio Corbo L. Exchange Rate Volatility, Trade, and Capital Flows Under Alternative Exchange Rate Regimes de Piet Sercu y Raman Uppal César Calderón M.
Publications Review
Catastro de publicaciones recientes Resúmenes de artículos seleccionados

A Challenges of Economic Growth: an Overview
Carlos Massad A.

This article is part of the conference “The Challenges of Economic Growth” organized by the Central Bank of Chile in November 2001. It summarizes the development and the state of the art on economic growth literature and critically discusses the main theoretical and empirical insights provided by the papers presented at the conference.

Coping With Chile’s External Vulnerability: A Financial Problem
Ricardo Caballero G.

With traditional domestic imbalances long under control, the Chilean business cycle is driven by external shocks. Most importantly, Chile’s external vulnerability is primarily a financial problem. A decline in the Chilean termsof- trade, for example, is associated to a decline in real GDP that is many times larger than one would predict in the presence of perfect financial markets. The financial nature of this excess-sensitivity has two central dimensions: a sharp contraction in Chile’s access to international financial markets when it needs it the most; and an inefficient reallocation of this scarce access across domestic borrowers during external crises. In this paper I characterize this financial mechanism and argue that Chile’s aggregate volatility can be reduced significantly by fostering the private sector’s development of financial instruments that are contingent on Chile’s main external shocks. As a first step, the Central Bank or IFIs could issue a benchmark instrument contingent on these shocks. I also advocate a countercyclical monetary policy but mainly for incentive —that is, as a substitute for taxes on capital inflows and equivalent measures— rather than for ex-post liquidity purposes.

The Golden Period For Growth In Chile: Explanations And Forecasts
Francisco Gallego Y. / Norman Loayza O.

Economic growth in Chile since the mid 1980s has been remarkable for its high level and persistence. This paper explores the factors behind the high growth rates of the past 15 years and analyzes the extent to which they can be sustained in the future. The first part of the paper presents some stylized facts about growth in Chile. Taken together, they suggest that the jump in growth was driven by policies and macroeconomic conditions that affected the economy’s overall productivity. The second part of the paper considers the large body of recent empirical growth literature to examine the extent to which a cross-country approach can explain Chile’s growth performance. It formulates a basic regression model that contains the most popular variables in the growth literature and estimates it using techniques suited for dynamic models of panel data. The basic model allows us to explain about 45% of the change in the growth rate between 1970-1985 and 1986-1998, which was 4.74 percentage points. When we expand the basic model to include the quality of the political system and governance, the comprehensiveness and complementarity of policy reforms, and the availability of public services and infrastructure, we can explain 73% of the growth improvement. The last part of the paper starts the assessment of possible new growth sources for Chile by, first, projecting the country’s growth rate for the next 10 years under various assumptions and, second, proposing some areas with potentially large returns.

Research Notes

Promoviendo el Crecimiento en América Latina
Anne Krueger

El Camino de las Reformas
Jorge Marshall R.

El Desafío del Crecimiento Económico en Chile
Francisco Rosende R.

Crecimiento Económico en Chile: Presente, Pasado y Futuro
Jorge Rodríguez G.

The Elusive Quest for Growth. Economic Adventures and Misadventures in the Tropics de William Easterly
Vittorio Corbo L.
Exchange Rate Volatility, Trade, and Capital Flows Under Alternative Exchange Rate Regimes de Piet Sercu y Raman Uppal
César Calderón M.

Publications Review

Catastro de publicaciones recientes

Resúmenes de artículos seleccionados