Journal Economía Chilena (The Chilean Economy)

Articles
The output Gap in chile: Measurement and Evaluation Rodrigo Fuentes S. / Fabián Gredig U. / Mauricio Larraín E. This paper estimates potential GDP growth and output gaps for the period 1986-2007 using three different methodologies: (i) production function, (ii) Kalman filter proxy (univariate and multivariate) and (iii) structural VAR . The output gap estimates show a high degree of mutual consistency. The methods suggest that at the beginning of the sample period the economy was overheated with considerably wide positive gaps. From 1993 through the Asian crisis, the gap was positive but small. From the crisis onwards estimates show a negative gap with a mild trend to close, but becomes positive in 2007. To evaluate the different gap measurements, real-time estimates are compared with ex-post estimates in terms of their capacity for forecasting future inflation. For potential GDP growth, the different methods yield similar results. For the full period, trend GDP growth is estimated at around 5.5%. However, significant differences exist across sub-periods, particularly showing a deceleration in the aftermath of the 1999 recession.
Estimating the NAIRU for Chile Jorge E. Restrepo L. The purpose of this paper is to obtain a set of estimates of the non-accelerating-inflation rate of unemployment (NAIRU) for Chile. Measuring the NAIRU permits building the unemployment gap, which is a complementary measure of activity and output gap, which is used on a regular basis by central banks as another indicator helping in inflation forecasts and policy decision making. Initially, an estimate is obtained based on a purely statistical method (unobserved components) Later, estimates are conducted for both constant and variable NAIRU based on Phillips curve equations. The different estimates yield similar results, indicating that the most likely point estimate for the current NAIRU stands between 7.4% and 8.3%. However, these figures are contained in a confidence interval ranging from 6.5% to 9.7%, reflecting great uncertainty regarding the exact value of NAIRU.
The Neutral Interest Rate: Estimates for Chile Rodrigo Fuentes S. / Fabián Gredig U. To estimate the neutral real interest rate for Chile, we use a variety of methods that can be classified into three categories: those derived from economic theory, the neutral rate implicit in financial assets, and statistical procedures using macroeconomic data. We conclude that the neutral rate is not constant over time, but it is closely related with—though not equivalent to—the potential GDP growth rate. The application of the different methods yields fairly similar results. The neutral real interest rate for Chile seems to be in the range from 2.1% to 3.5%, with a median of 2.8% taking data of the fourth quarter of 2007.
Equilibrium Real Exchange Rate in Chile: Alternative Approaches Rodrigo Caputo G. / Marco Núñez N In the monetary policy framework based on inflation targeting and a floating exchange rate, it is necessary to know the equilibrium real exchange rate (RER). This paper describes models for determining the equilibrium RER of regular use at the CBC. In particular, the purchasing power parity, macroeconomic balance, and reduced-form models are discussed. We show how these paradigms are used complementarily to report the judgment of economic policymakers. We also discuss the way in which the structural surplus rule in place, under which the state saves a large part of copper income, has tended to attenuate the previous relationship between the RER and the terms of trade. This change leads to revising the ways of implementing the reduced-form models. Specifically, we suggest that, within the current fiscal policy framework, one of the fundamentals of the RER are the non-copper terms of trade rather than the aggregate terms of trade.
Research Notes
Mercado de Cobertura Cambiaria y Tasa de Interés Local en Dólares Felipe Alarcón G. / Daniel Calvo C. / Pamela Jervis O.
Índice de Remuneraciones Ponderado por Costos: Brecha entre IREM y CMO Marcus Cobb C. / Andrea Sánchez Y. / Igal Magendzo W.
Generación de Energía Eléctrica en un Modelo para Proyectar el IMACEC Marcela Urrutia A. / Andrea Sánchez Y.
Books review
Monetary Policy, Inflation and the Business Cycle, an Introduction to the New Keynesian Framework de Jordi Galí Jorge E. Restrepo L.
Collapse – How Societies Choose to Fail or Succeed de Jared M. Diamond Kevin Cowan L
Publications Review
Catastro de publicaciones recientes y resúmenes de artículos seleccionados

The output Gap in chile: Measurement and Evaluation
Rodrigo Fuentes S. / Fabián Gredig U. / Mauricio Larraín E.

This paper estimates potential GDP growth and output gaps for the period 1986-2007 using three different methodologies: (i) production function, (ii) Kalman filter proxy (univariate and multivariate) and (iii) structural VAR . The output gap estimates show a high degree of mutual consistency. The methods suggest that at the beginning of the sample period the economy was overheated with considerably wide positive gaps. From 1993 through the Asian crisis, the gap was positive but small. From the crisis onwards estimates show a negative gap with a mild trend to close, but becomes positive in 2007. To evaluate the different gap measurements, real-time estimates are compared with ex-post estimates in terms of their capacity for forecasting future inflation. For potential GDP growth, the different methods yield similar results. For the full period, trend GDP growth is estimated at around 5.5%. However, significant differences exist across sub-periods, particularly showing a deceleration in the aftermath of the 1999 recession.

Estimating the NAIRU for Chile
Jorge E. Restrepo L.

The purpose of this paper is to obtain a set of estimates of the non-accelerating-inflation rate of unemployment (NAIRU) for Chile. Measuring the NAIRU permits building the unemployment gap, which is a complementary measure of activity and output gap, which is used on a regular basis by central banks as another indicator helping in inflation forecasts and policy decision making. Initially, an estimate is obtained based on a purely statistical method (unobserved components) Later, estimates are conducted for both constant and variable NAIRU based on Phillips curve equations. The different estimates yield similar results, indicating that the most likely point estimate for the current NAIRU stands between 7.4% and 8.3%. However, these figures are contained in a confidence interval ranging from 6.5% to 9.7%, reflecting great uncertainty regarding the exact value of NAIRU.

The Neutral Interest Rate: Estimates for Chile
Rodrigo Fuentes S. / Fabián Gredig U.

To estimate the neutral real interest rate for Chile, we use a variety of methods that can be classified into three categories: those derived from economic theory, the neutral rate implicit in financial assets, and statistical procedures using macroeconomic data. We conclude that the neutral rate is not constant over time, but it is closely related with—though not equivalent to—the potential GDP growth rate. The application of the different methods yields fairly similar results. The neutral real interest rate for Chile seems to be in the range from 2.1% to 3.5%, with a median of 2.8% taking data of the fourth quarter of 2007.

Equilibrium Real Exchange Rate in Chile: Alternative Approaches
Rodrigo Caputo G. / Marco Núñez N

In the monetary policy framework based on inflation targeting and a floating exchange rate, it is necessary to know the equilibrium real exchange rate (RER). This paper describes models for determining the equilibrium RER of regular use at the CBC. In particular, the purchasing power parity, macroeconomic balance, and reduced-form models are discussed. We show how these paradigms are used complementarily to report the judgment of economic policymakers. We also discuss the way in which the structural surplus rule in place, under which the state saves a large part of copper income, has tended to attenuate the previous relationship between the RER and the terms of trade. This change leads to revising the ways of implementing the reduced-form models. Specifically, we suggest that, within the current fiscal policy framework, one of the fundamentals of the RER are the non-copper terms of trade rather than the aggregate terms of trade.

Research Notes

Mercado de Cobertura Cambiaria y Tasa de Interés Local en Dólares
Felipe Alarcón G. / Daniel Calvo C. / Pamela Jervis O.

Índice de Remuneraciones Ponderado por Costos: Brecha entre IREM y CMO
Marcus Cobb C. / Andrea Sánchez Y. / Igal Magendzo W.

Generación de Energía Eléctrica en un Modelo para Proyectar el IMACEC
Marcela Urrutia A. / Andrea Sánchez Y.

Monetary Policy, Inflation and the Business Cycle, an Introduction to the New Keynesian Framework de Jordi Galí
Jorge E. Restrepo L.

Collapse – How Societies Choose to Fail or Succeed de Jared M. Diamond
Kevin Cowan L

Catastro de publicaciones recientes y resúmenes de artículos seleccionados

Banco Central de Chile

Revista Economía Chilena

Published Issues