This paper deals with the relationship between inflation targeting and exchange rates. I address three specific issues: first, I analyze the effectiveness of nominal exchange rates as shock absorbers in countries with inflation targeting. This issue is closely related to the magnitude of the...

The purpose of this paper is to analyze empirically the importance of inflationary persistence in a group of sixteen advanced and developing countries. We do this by studying, in great detail, the time series properties of inflation using both univariate as well as multivariate techniques. We...

In this paper we analyze the macroeconomic record of dollarized economies. In particular, we investigate whether, as its supporters’ claim, dollarization is associated with lower inflation and faster growth. We analyze this issue by using a matching estimator technique developed in the...

This paper analyzes the role productivity growth had on disinflation in Chile during the 1990s. It argues that productivity growth was key in avoiding the output costs of stabilization in a highly indexed economy. Disinflation from the early 1990s through 1998 was costless. Among the many...

This paper analyzes the rapid growth of money (M1A) in the Chilean economy that has coincided with low inflation and a loosened monetary policy. This has been advocated to assert that such monetary growth is inconsistent with the inflation target. This work is intended to prove such an argument...

This paper reviews the Chilean experience of growth, with particular focus on the rapid growth that began in the mid-1980s, as the economy recovered from the crisis of 1982. This process slowed down in the late nineties. This paper also reviews the evidence on growth and decomposes the rate of...

Latin America has been dominated by growth expansions that, more often than not, have ended in crises and protracted periods of stagnation. This has led to poor growth performance during most of the past century. This paper reviews Latin American growth experiences and discusses some particular...

This paper analyzes the Chilean experience with capital flows. We discuss the role played by capital controls, financial regulations and the exchange rate regime. The focus is on the period after 1990, the period when Chile returned to international capital markets. We also discuss the early...

This paper analyzes the significant reduction in the volatility of output growth and inflation seen in the Chilean economy in the present decade. This reduced volatility, sometimes called the “great moderation,” coincides with several important changes to the Chilean macroeconomic framework,...

The paper reviews the exchange rate management experience in Chile, with particular emphasis on the floating exchange rate regime and its two forex intervention episodes. It presents evidence on Chile’s favorable conditions to face exchange rate shocks: a well-developed financial sector, that...