This paper addresses three main questions; how can a country specialized in primary goods become an exporter of manufacturing goods? How does factor abundance affect the possibilities of achieving comparative advantages in manufactures? Does the type of natural resource abundance make any...

This paper discusses the implications on sector growth within the context of a specialization model based on factor endowment. The empirical literature is examined, which reveals that the only way for the economy to alter its specialization patterns toward the production of goods that are...

The effects of monetary policy depend significantly on the capacity of the Central Bank to affect market interest rates by managing liquidity. Therefore, it comes out as an important issue to determine the degree of flexibility of lending and deposit rates to changes in policy rates. In this...

In this paper we estimate the output gap and the growth rate of potential output in Chile for the 1986-2005 period, using three different methods: (i) a production function approach, (ii) a Kalman filter approach (univariate and multivariate), and (iii) a structural vector autoregression (SVAR)....

The Central Bank of Chile replaced its monetary policy instrument in August 2001, shifting from a monetary policy rate (MPR) linked to an indexed unit of account (UF, defined by the lagged CPI) to a nominal MPR denominated in pesos. This policy change was complemented with a significant change...

This paper provides new empirical evidence on macroeconomic policies and results in Latin America and the Caribbean (LAC), based on recent data for the region and the world at large. Our results show that: (i) both monetary and fiscal policies are counter- (pro-) cyclical when credibility is...

An important condition for convergence is that countries share the same technology for the aggregate production function (Solow, 1956). If countries produce a different mix of products, however, they will have a different aggregate production function. We argue that the inclusion of a fixed...

We evaluate the growth effects of real exchange rate (RER) misalignments and their volatility. We calculate RER misaligments as deviations of actual RERs from their equilibrium for 60 countries over 1965-2003 using panel and time series cointegration methods. Using dynamic panel data techniques...

The Chilean economy underwent a deep structural change in the mid-seventies, through several economic reforms. Among these, the most impressive one was trade liberalization. This process caused a string of bankruptcies in the manufacturing industry and a reduction in the share of this sector in...

Despite the important role that total factor productivity (TFP) has played in growth literature, few attempts have been made to change the methodology to estimate it. This paper proposes a methodology based on state–space model to estimate TFP and its determinants. With this methodology it is...