Journal Economía Chilena (The Chilean Economy)

Articles
The Monetary Policy Horizon in Chile and Other Inflation-Targeting Countries Fabián Gredig U. / Klaus Schmidt-Hebbel D./ Rodrigo O. Valdés P. Tolerating some volatility in the rate of inflation leads the design of inflation target characteristics—in inflation-targeting economies—to reflect flexibility in four dimensions, namely: the price index that defines the target, the width of the target range, the midpoint of the monetary policy horizon (MPH) and the time range of the MPH. This paper evaluates Chile’s MPH—recently redefined by the Central Bank of Chile—in light of the Chilean experience and in an international comparison with other inflation targeters around the world. We review analytical and practical aspects of the formulation of the inflation-targeting framework. Then we present descriptive information on inflation, its volatility and its deviation from the target for all inflation-targeting countries, in order to infer the actual degree of tolerance countries have had toward inflation rates’ deviation and volatility. Next we describe the current design of monetary policy in the four aforesaid dimensions of flexibility in inflation-targeting countries. Finally, we review inflation forecasts published by the Central Bank of Chile and evaluate the consistency between the announced MPH and the Bank’s actual policy horizon
A Framework for Printing and Minting Plans Rómulo A. Chumacero E./ Claudio Pardo M./ David Valdés V. This paper presents alternative models for forecasting the demand for bills and coins of different denominations. When compared to the models often used, the root mean squared forecasting error is substantially reduced. The paper also develops a new framework to formulate the printing and minting programs by using density forecasts along with information on technological constraints and preferences of the policy maker.
Exchange Rate Analysis in Practice Rodrigo Caputo G. / Marco Núñez N. / Rodrigo O. Valdés P. This paper describes the main tools used to analyze the exchange rate in the process of conducting and analyzing the macroeconomic policies of the Chilean Central Bank (CCB). In doing so, we first describe the main methodologies used to construct real exchange rate (RER) indices, and corroborate that the RER index regularly published by the CCB has the desired properties. Second, we discuss different concepts of RER equilibrium and review methodologies that can empirically approximate the concept of medium to long-term RER equilibrium. For all these methodologies, we report estimations of the equilibrium RER during 2005. In each case, we identify the main assumptions behind the results. Finally, we analyze some variables that describe the behavior of the exchange market, that are a complementary tool to the equilibrium RER estimates, and are useful to assess whether there is an unusual behavior or exceptional circumstances in this market.
Bankruptcy Prediction for Chilean Companies Felipe Zurita L. This paper compares statistical and option-based models of financial instability for the group of listed Chilean companies. Statistical models have the proper fit, although the peculiar history of bankruptcies in the period of analysis, namely their concentration in the early period, questions their usefulness as a predictive tool. In models based on option theory, on the other hand, average bankruptcy probabilities appear to be highly correlated with bank risk indicators, and precedes them by up to three quarters. Overall, this first measuring effort is moderately successful, but reveals a number of paths worth exploring.
Research Notes
Comportamiento del Precio Internacional de Granos Seleccionados y su Impacto en la Inflación Eduardo López E. / Francisco Meneses P./ J. Felipe Córdova F. / M. Carolina Grünwald N.
Metodologías para la Estimación de Expectativas sobre Tasas de Política Monetaria Felipe Jaque S./ Alfredo Pistelli M.
Predictibilidad Encubierta en Economía: El Caso del Tipo de Cambio Nominal Chileno Pablo Pincheira B.
Books review
The Demand for Money: Theoretical and Empirical Approaches de Apostolos Serletis J. Rodrigo Fuentes S.
Emerging Capital Markets and Globalization: The Latin American Experience de Augusto de la Torre y Sergio L. Schmukler Claudia Sotelo V.
Publications Review
Catastro de publicaciones recientes y resúmenes de artículos seleccionados

The Monetary Policy Horizon in Chile and Other Inflation-Targeting Countries
Fabián Gredig U. / Klaus Schmidt-Hebbel D./ Rodrigo O. Valdés P.

Tolerating some volatility in the rate of inflation leads the design of inflation target characteristics—in inflation-targeting economies—to reflect flexibility in four dimensions, namely: the price index that defines the target, the width of the target range, the midpoint of the monetary policy horizon (MPH) and the time range of the MPH. This paper evaluates Chile’s MPH—recently redefined by the Central Bank of Chile—in light of the Chilean experience and in an international comparison with other inflation targeters around the world. We review analytical and practical aspects of the formulation of the inflation-targeting framework. Then we present descriptive information on inflation, its volatility and its deviation from the target for all inflation-targeting countries, in order to infer the actual degree of tolerance countries have had toward inflation rates’ deviation and volatility. Next we describe the current design of monetary policy in the four aforesaid dimensions of flexibility in inflation-targeting countries. Finally, we review inflation forecasts published by the Central Bank of Chile and evaluate the consistency between the announced MPH and the Bank’s actual policy horizon

A Framework for Printing and Minting Plans
Rómulo A. Chumacero E./ Claudio Pardo M./ David Valdés V.

This paper presents alternative models for forecasting the demand for bills and coins of different denominations. When compared to the models often used, the root mean squared forecasting error is substantially reduced. The paper also develops a new framework to formulate the printing and minting programs by using density forecasts along with information on technological constraints and preferences of the policy maker.

Exchange Rate Analysis in Practice
Rodrigo Caputo G. / Marco Núñez N. / Rodrigo O. Valdés P.

This paper describes the main tools used to analyze the exchange rate in the process of conducting and analyzing the macroeconomic policies of the Chilean Central Bank (CCB). In doing so, we first describe the main methodologies used to construct real exchange rate (RER) indices, and corroborate that the RER index regularly published by the CCB has the desired properties. Second, we discuss different concepts of RER equilibrium and review methodologies that can empirically approximate the concept of medium to long-term RER equilibrium. For all these methodologies, we report estimations of the equilibrium RER during 2005. In each case, we identify the main assumptions behind the results. Finally, we analyze some variables that describe the behavior of the exchange market, that are a complementary tool to the equilibrium RER estimates, and are useful to assess whether there is an unusual behavior or exceptional circumstances in this market.

Bankruptcy Prediction for Chilean Companies
Felipe Zurita L.

This paper compares statistical and option-based models of financial instability for the group of listed Chilean companies. Statistical models have the proper fit, although the peculiar history of bankruptcies in the period of analysis, namely their concentration in the early period, questions their usefulness as a predictive tool. In models based on option theory, on the other hand, average bankruptcy probabilities appear to be highly correlated with bank risk indicators, and precedes them by up to three quarters. Overall, this first measuring effort is moderately successful, but reveals a number of paths worth exploring.

Research Notes

Comportamiento del Precio Internacional de Granos Seleccionados y su Impacto en la Inflación
Eduardo López E. / Francisco Meneses P./ J. Felipe Córdova F. / M. Carolina Grünwald N.

Metodologías para la Estimación de Expectativas sobre Tasas de Política Monetaria
Felipe Jaque S./ Alfredo Pistelli M.

Predictibilidad Encubierta en Economía: El Caso del Tipo de Cambio Nominal Chileno
Pablo Pincheira B.

The Demand for Money: Theoretical and Empirical Approaches
de Apostolos Serletis J. Rodrigo Fuentes S.

Emerging Capital Markets and Globalization: The Latin American Experience de Augusto de la Torre y Sergio L. Schmukler
Claudia Sotelo V.

Catastro de publicaciones recientes y resúmenes de artículos seleccionados

Banco Central de Chile

Revista Economía Chilena

Published Issues