Chile menos volátil

Felipe Larraín B., Francisco Parro

Research output: Contribution to journalArticle

4 Citations (Scopus)

Abstract

Between 1988 and 1998 Chile's average economic growth reached 7.8%. Nonetheless, growth decelerated sharply after the Asian Crisis; since 1998 the average economic expansion was only 3.7%. Along with this deceleration, the volatility of the economy was cut by more than half. Using a formal empirical analysis, this paper investigates the role that the adoption of both a floating exchange rate scheme and the use of the Structural Surplus Rule had in transforming Chile into a less volatile economy. Our results show that the introduction of the fiscal rule allowed for a reduction in the volatility of GDP growth by one third. On the other hand, the introduction of the flexible exchange rate mechanism contributed to reduce the volatility by one quarter. Thus, jointly, both policy reforms diminished the volatility of the Chilean economy by almost 60%. These results are robust to alternative specifications and endogeneity problems in some of the explanatory variables.

Original languageSpanish
Pages (from-to)563-596
Number of pages34
JournalTrimestre Economico
Volume75
Issue number3
StatePublished - Jul 1 2008

Fingerprint

Chile
Exchange rate mechanism
Surplus
Asian crisis
Economic growth
GDP growth
Endogeneity
Empirical analysis
Floating exchange rates
Flexible exchange rates
Economics
Policy reform
Fiscal rules

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

Cite this

Larraín B., F., & Parro, F. (2008). Chile menos volátil. Trimestre Economico, 75(3), 563-596.
Larraín B., Felipe ; Parro, Francisco. / Chile menos volátil. In: Trimestre Economico. 2008 ; Vol. 75, No. 3. pp. 563-596.
@article{09a061ada3c342ae80adf7001dac317c,
title = "Chile menos vol{\'a}til",
abstract = "Between 1988 and 1998 Chile's average economic growth reached 7.8{\%}. Nonetheless, growth decelerated sharply after the Asian Crisis; since 1998 the average economic expansion was only 3.7{\%}. Along with this deceleration, the volatility of the economy was cut by more than half. Using a formal empirical analysis, this paper investigates the role that the adoption of both a floating exchange rate scheme and the use of the Structural Surplus Rule had in transforming Chile into a less volatile economy. Our results show that the introduction of the fiscal rule allowed for a reduction in the volatility of GDP growth by one third. On the other hand, the introduction of the flexible exchange rate mechanism contributed to reduce the volatility by one quarter. Thus, jointly, both policy reforms diminished the volatility of the Chilean economy by almost 60{\%}. These results are robust to alternative specifications and endogeneity problems in some of the explanatory variables.",
author = "{Larra{\'i}n B.}, Felipe and Francisco Parro",
year = "2008",
month = "7",
day = "1",
language = "Spanish",
volume = "75",
pages = "563--596",
journal = "Trimestre Economico",
issn = "0041-3011",
publisher = "Fondo de Cultura Economica",
number = "3",

}

Larraín B., F & Parro, F 2008, 'Chile menos volátil', Trimestre Economico, vol. 75, no. 3, pp. 563-596.

Chile menos volátil. / Larraín B., Felipe; Parro, Francisco.

In: Trimestre Economico, Vol. 75, No. 3, 01.07.2008, p. 563-596.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Chile menos volátil

AU - Larraín B., Felipe

AU - Parro, Francisco

PY - 2008/7/1

Y1 - 2008/7/1

N2 - Between 1988 and 1998 Chile's average economic growth reached 7.8%. Nonetheless, growth decelerated sharply after the Asian Crisis; since 1998 the average economic expansion was only 3.7%. Along with this deceleration, the volatility of the economy was cut by more than half. Using a formal empirical analysis, this paper investigates the role that the adoption of both a floating exchange rate scheme and the use of the Structural Surplus Rule had in transforming Chile into a less volatile economy. Our results show that the introduction of the fiscal rule allowed for a reduction in the volatility of GDP growth by one third. On the other hand, the introduction of the flexible exchange rate mechanism contributed to reduce the volatility by one quarter. Thus, jointly, both policy reforms diminished the volatility of the Chilean economy by almost 60%. These results are robust to alternative specifications and endogeneity problems in some of the explanatory variables.

AB - Between 1988 and 1998 Chile's average economic growth reached 7.8%. Nonetheless, growth decelerated sharply after the Asian Crisis; since 1998 the average economic expansion was only 3.7%. Along with this deceleration, the volatility of the economy was cut by more than half. Using a formal empirical analysis, this paper investigates the role that the adoption of both a floating exchange rate scheme and the use of the Structural Surplus Rule had in transforming Chile into a less volatile economy. Our results show that the introduction of the fiscal rule allowed for a reduction in the volatility of GDP growth by one third. On the other hand, the introduction of the flexible exchange rate mechanism contributed to reduce the volatility by one quarter. Thus, jointly, both policy reforms diminished the volatility of the Chilean economy by almost 60%. These results are robust to alternative specifications and endogeneity problems in some of the explanatory variables.

UR - http://www.scopus.com/inward/record.url?scp=49249132091&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=49249132091&partnerID=8YFLogxK

M3 - Article

AN - SCOPUS:49249132091

VL - 75

SP - 563

EP - 596

JO - Trimestre Economico

JF - Trimestre Economico

SN - 0041-3011

IS - 3

ER -

Larraín B. F, Parro F. Chile menos volátil. Trimestre Economico. 2008 Jul 1;75(3):563-596.