Journal Economía Chilena (The Chilean Economy)

Articles
The Autonomy of the Central BanK oF ChiLe Twenty Years on José De Gregorio R. In recent decades, the number of independent central banks has grown steadily. In Chile, autonomy was adopted twenty years ago. This paper discusses the reasons why central bank independence is convenient for the economy, together with the importance of transparency as a complementary feature. Finally, some results are presented, particularly for the Chilean case, that illustrate how adopting autonomy resulted in lower and more stable inflation rates and a smoother business cycle.
The Autonomy of the Central Bank of Chile: Origins and Legitimacy Andrés Bianchi L. The Central Bank of Chile was granted autonomy through its Basic Constitutional Act that was enacted in October 1989, towards the end of the military regime. Because of this origin, in its beginnings this reform was subject to strong criticism. This paper analyzes the political and economic processes that explain how the Bank’s independence gradually gained legitimacy and ultimately obtained the widespread acceptance it enjoys today.
Persistent Supply Shocks: A Pain in the Neck for Central Banks? Felipe Morandé L. / Mauricio Tejada G. Between 2007 and 2008, the Chilean economy experienced multiple cost shocks, ranging from skyrocketing international commodity prices to the cut of natural gas supply from Argentina. These shocks, which were more persistent than expected when they first started, led to an inflation rate that significantly exceeded the target established by the Central Bank. With this in mind, the objective of this paper is to analyze and quantify the implications of the more persistent supply shocks on the main macroeconomic variables, i.e., the inflation rate, the output gap, the interest rate, and the exchange rate. We find that more persistent supply shocks lead to greater inertia (as expected), as well as to greater volatility of these variables. This, in turn, causes the disequilibrium generated by this type of shock to disappear rather slowly. In addition, a greater level of indexation originating in a potential de-anchoring of expectations could intensify the impact of supply shocks’ persistence. Finally, the effects on inflation are nullified if the central bank only considers the inflation rate in its loss function.
Consumer Banking and Credit Risk Rodrigo Alfaro A. / Daniel Calvo C. / Daniel Oda Z. Following Jara and Oda (2007), we consider a group of Chilean banks specializing in consumer loans. Taking the dynamics of the group as a whole, we propose a credit risk model that is based on loan loss provisions. Using accounting ratios, we show that a model for this purpose is dynamic and highly non-linear. Our empirical results show that the banking aggregates loan loss provisions, write-offs, and total loans can be modelled for this group of banks using a small number of macroeconomics variables. Actually, we conclude that the output gap is a strong factor in the model, and that the model performs well when only this external factor is considered.
Research Notes
Dinámica Laboral y Evolución del Desempleo en Chile Ingrid Jones J./ Alberto Naudon D.
Efectos de Primas Financieras Sobre la Actividad Agregada Benjamín García S. / Juan Pablo Medina G.
Elasticidades de Precios de Productos Básicos Relevantes para la Economía Chilena Eduardo López E. / Francisco Meneses P. / Víctor Riquelme P.
Books review
Monetary Policy under Uncertainty and Learning de Klaus Schmidt-Hebbel y Carl E. Walsh (editores) Nicolás Eyzaguirre G.
Introduction to Modern Economic Growth de Daron Acemoglu Francisco A. Gallego Y.
Publications Review
Catastro de publicaciones recientes y resúmenes de artículos seleccionados

The Autonomy of the Central BanK oF ChiLe Twenty Years on
José De Gregorio R.

In recent decades, the number of independent central banks has grown steadily. In Chile, autonomy was adopted twenty years ago. This paper discusses the reasons why central bank independence is convenient for the economy, together with the importance of transparency as a complementary feature. Finally, some results are presented, particularly for the Chilean case, that illustrate how adopting autonomy resulted in lower and more stable inflation rates and a smoother business cycle.

The Autonomy of the Central Bank of Chile: Origins and Legitimacy
Andrés Bianchi L.

The Central Bank of Chile was granted autonomy through its Basic Constitutional Act that was enacted in October 1989, towards the end of the military regime. Because of this origin, in its beginnings this reform was subject to strong criticism. This paper analyzes the political and economic processes that explain how the Bank’s independence gradually gained legitimacy and ultimately obtained the widespread acceptance it enjoys today.

Persistent Supply Shocks: A Pain in the Neck for Central Banks?
Felipe Morandé L. / Mauricio Tejada G.

Between 2007 and 2008, the Chilean economy experienced multiple cost shocks, ranging from skyrocketing international commodity prices to the cut of natural gas supply from Argentina. These shocks, which were more persistent than expected when they first started, led to an inflation rate that significantly exceeded the target established by the Central Bank. With this in mind, the objective of this paper is to analyze and quantify the implications of the more persistent supply shocks on the main macroeconomic variables, i.e., the inflation rate, the output gap, the interest rate, and the exchange rate. We find that more persistent supply shocks lead to greater inertia (as expected), as well as to greater volatility of these variables. This, in turn, causes the disequilibrium generated by this type of shock to disappear rather slowly. In addition, a greater level of indexation originating in a potential de-anchoring of expectations could intensify the impact of supply shocks’ persistence. Finally, the effects on inflation are nullified if the central bank only considers the inflation rate in its loss function.

Consumer Banking and Credit Risk
Rodrigo Alfaro A. / Daniel Calvo C. / Daniel Oda Z.

Following Jara and Oda (2007), we consider a group of Chilean banks specializing in consumer loans. Taking the dynamics of the group as a whole, we propose a credit risk model that is based on loan loss provisions. Using accounting ratios, we show that a model for this purpose is dynamic and highly non-linear. Our empirical results show that the banking aggregates loan loss provisions, write-offs, and total loans can be modelled for this group of banks using a small number of macroeconomics variables. Actually, we conclude that the output gap is a strong factor in the model, and that the model performs well when only this external factor is considered.

Research Notes

Dinámica Laboral y Evolución del Desempleo en Chile
Ingrid Jones J./ Alberto Naudon D.

Efectos de Primas Financieras Sobre la Actividad Agregada
Benjamín García S. / Juan Pablo Medina G.

Elasticidades de Precios de Productos Básicos Relevantes para la Economía Chilena
Eduardo López E. / Francisco Meneses P. / Víctor Riquelme P.

Monetary Policy under Uncertainty and Learning de Klaus Schmidt-Hebbel y Carl E. Walsh (editores)
Nicolás Eyzaguirre G.

Introduction to Modern Economic Growth de Daron Acemoglu
Francisco A. Gallego Y.

Catastro de publicaciones recientes y resúmenes de artículos seleccionados

Banco Central de Chile

Revista Economía Chilena

Published Issues