Políticas de Estabilización en Chile Durante los Noventa

Carlos José García

Working Papers Central Bank of Chile from Central Bank of Chile

Abstract: This paper provides econometric evidence on the effectiveness of targeting inflation in order to reduce the rate of inflation in Chile in the 1991-97 period. This paper shows that the inflation target altered the inflationary dynamic, by following through with out–of-sample forecasts with VAR models. Second, this paper estimates the Central Bank’s feedback rule by using a semi-structural VAR, which shows that an unexpected and temporary real interest shock can reduce the inflationary gap. However, this paper argues that the strategy of using unexpected and temporary shocks to explain the decline in inflation is misleading. The paper supports this with consideration to the fact that the inflation target was an announced, decreasing, and permanent policy. Third, by using an unrestricted VAR, this paper performs dynamic solutions that assume an exogenous and known path for the inflation target. The results indicate that the decreasing inflation target gradually led inflation to the single-digit range without a drop in output. However, the real appreciation observed during this period and connected with a capital inflow shock was also an important element to explain the decline in the rate of inflation.

Date: 2001-12
New Economics Papers: this item is included in nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.bcentral.cl/documents/33528/133326/DTBC_132.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:chb:bcchwp:132

Access Statistics for this paper

More papers in Working Papers Central Bank of Chile from Central Bank of Chile Contact information at EDIRC.
Bibliographic data for series maintained by Alvaro Castillo ().