Journal Economía Chilena (The Chilean Economy)

Articles
MACROECONOMY, MONETARY POLICY AND CENTRAL BANK CAPITALIZATION Jorge E. Restrepo L. / Luis Salomó S. / Rodrigo O. Valdés P. This paper offers stochastic projections of the Central Bank of Chile’s balance sheet (stocks and flows), grounded on its present deficit situation. These projections incorporate the effect on the balance sheet of some macroeconomic variables and alternative policies, taking into consideration the economy’s inherent uncertainty and risks. It also describes and evaluates the main causes of the current deficit. In the baseline scenario, our deterministic projections show that the Central Bank’s capital will tend to grow and reach positive figures after twenty-five years. However, statistical projections indicate that this capital will continue in the red twenty-five years into the future with a 69% probability. On the other hand, a capital contribution of 7% of GDP would be necessary for senior liabilities not to surpass assets in ten years’ time, with a 95% probability. The likely evolution of capital is more favorable in the long run if the reserve hoarding growth rate is moderated, if minimum capital is established in real terms instead of nominal terms, and if accrued, unrealized, foreign exchange gains are not distributed.
MONETAR Y POLICY EFFICIENCY IN CHILE WERE THERE ANY IMPROVEMENTS? J. Marcelo Ochoa C. Output and inflation volatility has declined significantly in recent years. This improved economic behavior can be explained by both a reduction in the shocks faced by the country and a better monetary policy conduct. This paper explores the contribution of both factors to boosting Chile’s economic performance in the past fifteen years through three measures derived from the economy’s efficiency frontier. The measure capturing macroeconomic behavior presents an improvement (decline) of 200% between the periods 1992-2000 and 2001-2007—reflecting the reduction in output and inflation volatility—a fact that is explained by a reduction in the shocks (123%), and by by monetary policy efficiency gains (83%). Furthermore, between 2001 and 2006, the Chilean economy experienced the smallest magnitude of shocks since 1992, while the monetary policy was responsible for keeping the economy above the efficiency frontier.
EVOLUTION OF HOUSING PRICES IN CHILE Eric Parrado H. / Paulo Cox P. / Marcelo Fuenzalida C. The availability of real estate data is clearly limited in Chile, which makes more complex the discussion of the possible vulnerabilities of households and the financial sector to risks arising from real estate markets. This paper proposes a set of housing price indicators for measuring the potential pressures that could be developing in the credit market. Using these price measures, we find that the recent sustained rise in home prices coincides with the sustained increase in disposable income and the decreasing trend of long-term interest rates, factors that have strongly driven the expansion of mortgage loans.
MORTGAGE SECURITIZATION AND ECONOMIC DEVELOPMENT: AN ESSAY ON CHILE’S CAJA DE CRÉDITO HIPOTECARIO Philip L. Brock This essay examines the first 50 years of the National Mortgage Bank of Chile (Caja de Crédito Hipotecario) following its creation in 1855. During the second half of the nineteenth century the Mortgage Bank’s credit operations spurred the rapid expansion of irrigation in Chile’s Central Valley and made possible a concomitant increase in agricultural exports. Despite the strong secular rise in credit during this period, the Mortgage Bank had to confront large external shocks, including three sudden stops of foreign capital in 1857, 1873, and 1890. This essay shows that after a shaky start the Mortgage Bank was able to provide liquidity to borrowers that offset declines in banking credit during years of financial distress.
Research Notes
La Dinámica de la Persistencia Inflacionaria en Chile Pablo Pincheira B.
Diferencias en Medidas de Compensación Inflacionaria y Swap Spread Felipe Alarcón G. / Matías Bernier B.
Ponderaciones y la Tasa de Inflación en Chile Michael Pedersen
Books review
Bond Markets in Latin America: On the Verge of a Big Bang? de Eduardo Borenzstein, Kevin Cowan, Barry Eichengreen y Ugo Panizza (editores) Diego Saravia T
When Markets Collide. Investment Strategies for the Age of Global Economic Change de Mohamed A. El-Erian Luis Antonio Ahumada C.
Publications Review
Catastro de publicaciones recientes y resúmenes de artículos seleccionados

MACROECONOMY, MONETARY POLICY AND CENTRAL BANK CAPITALIZATION
Jorge E. Restrepo L. / Luis Salomó S. / Rodrigo O. Valdés P.

This paper offers stochastic projections of the Central Bank of Chile’s balance sheet (stocks and flows), grounded on its present deficit situation. These projections incorporate the effect on the balance sheet of some macroeconomic variables and alternative policies, taking into consideration the economy’s inherent uncertainty and risks. It also describes and evaluates the main causes of the current deficit. In the baseline scenario, our deterministic projections show that the Central Bank’s capital will tend to grow and reach positive figures after twenty-five years. However, statistical projections indicate that this capital will continue in the red twenty-five years into the future with a 69% probability. On the other hand, a capital contribution of 7% of GDP would be necessary for senior liabilities not to surpass assets in ten years’ time, with a 95% probability. The likely evolution of capital is more favorable in the long run if the reserve hoarding growth rate is moderated, if minimum capital is established in real terms instead of nominal terms, and if accrued, unrealized, foreign exchange gains are not distributed.

MONETAR Y POLICY EFFICIENCY IN CHILE WERE THERE ANY IMPROVEMENTS?
J. Marcelo Ochoa C.

Output and inflation volatility has declined significantly in recent years. This improved economic behavior can be explained by both a reduction in the shocks faced by the country and a better monetary policy conduct. This paper explores the contribution of both factors to boosting Chile’s economic performance in the past fifteen years through three measures derived from the economy’s efficiency frontier. The measure capturing macroeconomic behavior presents an improvement (decline) of 200% between the periods 1992-2000 and 2001-2007—reflecting the reduction in output and inflation volatility—a fact that is explained by a reduction in the shocks (123%), and by by monetary policy efficiency gains (83%). Furthermore, between 2001 and 2006, the Chilean economy experienced the smallest magnitude of shocks since 1992, while the monetary policy was responsible for keeping the economy above the efficiency frontier.

EVOLUTION OF HOUSING PRICES IN CHILE
Eric Parrado H. / Paulo Cox P. / Marcelo Fuenzalida C.

The availability of real estate data is clearly limited in Chile, which makes more complex the discussion of the possible vulnerabilities of households and the financial sector to risks arising from real estate markets. This paper proposes a set of housing price indicators for measuring the potential pressures that could be developing in the credit market. Using these price measures, we find that the recent sustained rise in home prices coincides with the sustained increase in disposable income and the decreasing trend of long-term interest rates, factors that have strongly driven the expansion of mortgage loans.

MORTGAGE SECURITIZATION AND ECONOMIC DEVELOPMENT: AN ESSAY ON CHILE’S CAJA DE CRÉDITO HIPOTECARIO
Philip L. Brock

This essay examines the first 50 years of the National Mortgage Bank of Chile (Caja de Crédito Hipotecario) following its creation in 1855. During the second half of the nineteenth century the Mortgage Bank’s credit operations spurred the rapid expansion of irrigation in Chile’s Central Valley and made possible a concomitant increase in agricultural exports. Despite the strong secular rise in credit during this period, the Mortgage Bank had to confront large external shocks, including three sudden stops of foreign capital in 1857, 1873, and 1890. This essay shows that after a shaky start the Mortgage Bank was able to provide liquidity to borrowers that offset declines in banking credit during years of financial distress.

Research Notes

La Dinámica de la Persistencia Inflacionaria en Chile
Pablo Pincheira B.

Diferencias en Medidas de Compensación Inflacionaria y Swap Spread
Felipe Alarcón G. / Matías Bernier B.

Ponderaciones y la Tasa de Inflación en Chile
Michael Pedersen

Bond Markets in Latin America: On the Verge of a Big Bang? de Eduardo Borenzstein, Kevin Cowan, Barry Eichengreen y Ugo Panizza (editores)
Diego Saravia T

When Markets Collide. Investment Strategies for the Age of Global Economic Change de Mohamed A. El-Erian
Luis Antonio Ahumada C.

Catastro de publicaciones recientes y resúmenes de artículos seleccionados

Banco Central de Chile

Revista Economía Chilena

Published Issues