Fiscal and Monetary Contraction in Chile PDF Download

Author: Klaus Schmidt-Hebbel
Publisher: World Bank Publications
ISBN:
Category : Apertura economica - Chile
Languages : en
Pages : 46

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Author: Luis Servén
Publisher:
ISBN:
Category : Electronic books
Languages : en
Pages :

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June 1995 To analyze the probable macroeconomic impact of fiscal and monetary retrenchment in Chile, an open-economy, dynamic rational-expectations macroeconomic model is applied to data for Chile. For the past two decades, Chile has consistently pursued a course of macroeconomic stabilization and deep economic reform. But in recent years, real exchange rate appreciation and persistent moderate inflation have become key concerns for Chilean policymakers, suggesting the need for further fiscal and monetary retrenchment. Using an open-economy, dynamic rational-expectations macroeconomic model applied to Chile, Schmidt-Hebbel and Serven analyze and quantify the macroeconomic impact of fiscal and monetary retrenchment. Several features of the model are essential for a realistic assessment of the effects of fiscal and monetary policy shifts in Chile: backward indexation of wages, consolidation of the central bank and the general government, and the coexistence of (1) liquidity-constrained consumers and firms with (2) unconstrained agents whose consumption and investment decisions reflect intertemporal optimization with perfect foresight. This framework makes it possible to distinguish meaningfully between permanent and transitory policy changes, as well as between changes that are or are not anticipated. Simulations show that a balanced-budget fiscal contraction leads to a modest real depreciation, which is sharper in the short term (especially if the contraction is temporary). At the same time, this type of fiscal retrenchment causes a temporary deterioration of the current account. An orthodox money-based disinflation implemented by halving the growth rate of base money leads to a sharp real appreciation in the near term, with steep output and employment costs in the short run, but it also causes a transitory improvement in the current account. This paper--a product of the Macroeconomics and Growth Division, Policy Research Department--is part of a larger effort in the department to model macroeconomic policy in developing countries.

Author: Klaus Schmidt-Hebbel
Publisher:
ISBN:
Category :
Languages : en
Pages : 76

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Author: Klaus Schmidt-Hebbel
Publisher:
ISBN:
Category : Fiscal policy
Languages : en
Pages : 39

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Author: Mr.Andrés Pérez
Publisher: International Monetary Fund
ISBN: 1513514024
Category : Business & Economics
Languages : en
Pages : 52

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This booklet summarizes the presentations in the conference titled “Enhancing Chile’s Fiscal Framework: Lessons from Domestic and International Experience,” organized by Chile’s Ministry of Finance and the International Monetary Fund in January of 2019. The conference’s objective was to explore challenges and possible opportunities to improve Chile’s fiscal framework, including the fiscal rule, by looking at the Chilean and international experience. The conference had the valuable participation of current and former senior policymakers from Chile, including former Ministers of Finance ranging across the political spectrum and central bank presidents, which provided an insightful perspective in areas for improvement in the realm of fiscal policy. These views were complemented by representatives from the IMF and the Inter-American Development Bank, academics, and country officials from New Zealand and Peru, which provided lessons from the international experience.

Author: International Monetary Fund
Publisher: International Monetary Fund
ISBN: 1455208388
Category : Business & Economics
Languages : en
Pages : 58

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The cornerstone of Chile’s impressive fiscal performance and strong fiscal system has been its structural balance rule. It has helped to insulate public spending from copper price cycles and improve the government’s net financial position. Chile should adopt a full-fledged medium-term fiscal framework to improve fiscal planning and provide a framework for addressing temporary deviations from the fiscal rule. Publishing additional fiscal indicators in the budget, such as the non-copper structural balance, could provide more comprehensive information on the impact of fiscal policy on the domestic demand.

Author: Mr.Yan Carriere-Swallow
Publisher: International Monetary Fund
ISBN: 148433146X
Category : Business & Economics
Languages : en
Pages : 32

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This paper recounts Chile’s experience with capital account policies since the 1990s. We present how two external shocks were confronted under very different macroeconomic and capital account frameworks. We show that during the 1997-98 Asian-LTCM-Russia crisis, a closed capital account and relatively rigid exchange rate severely constrained the monetary policy response to the shock, aggravating the fall in domestic demand. During the 2008-09 crisis, a full-fledged inflation targeting framework allowed the authorities to implement a significant countercyclical response. We argue that domestic stability considerations lay behind the policy regime switch toward capital account liberalization from 1999 onwards.

Author: Francisco Gallego
Publisher:
ISBN:
Category : Chile
Languages : en
Pages : 56

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Author: International Monetary Fund
Publisher: INTERNATIONAL MONETARY FUND
ISBN: 9781451807585
Category : Business & Economics
Languages : en
Pages : 175

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Book Description
This paper presents four studies on selected issues of the Chilean economy. The new framework for fiscal policy represented by the authorities' target of a central government structural surplus of 1 percent of GDP is also discussed. This study examines whether the variance of the cyclical component of output in Chile and 11 other countries increased during the 1990s, a period during which the variance of inflation declined. The alternative measures of potential output for Chile are also estimated.

Author: International Monetary Fund
Publisher: International Monetary Fund
ISBN: 1463902239
Category : Business & Economics
Languages : en
Pages : 51

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In recent years, the IMF has released a growing number of reports and other documents covering economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with government officials, is published at the option of the member country.