This paper examines the growth and inflation forecasts contained in the Monetary Policy Reports (MPR) of the Central Bank of Chile, comparing them with private forecast, the forecasts made by the Bank during the previous decade, and the forecasts performed by other Central Banks that follow...

We construct performance-based measures of labor market rigidity considering an open economy framework. We derive and estimate an indicator that depends exclusively on the theoretical measure of unions' bargaining power, with which we rank a sample of 18 heterogeneous countries. The indicator is...

I study a generalized OLG economy where asymmetrically informed agents have arbitrary investment horizons. As horizons increase, the age-adjusted risk aversion of investors fall, and the risk transfer from forced liquidators into voluntary buyers drops. Two equilibria coexist for long enough...

We develop a dynamic nonlinear, noisy REE model of credit risk pricing under dispersed information that can theoretically and quantitatively account for the credit spread puzzle. The first contribution is a sharp analytical characterization of the dynamic REE equilibrium and its comparative...

This paper develops a model that explains the amplification of negative shocks faced by an economy through its banking system, but with a different grip as the standard financial accelerator theory. When a bank faces insolvency, it has incentives to continue sub-optimal projects in its...

This paper proposes a framework to assess the convenience of the current public debt denomination of the Chilean Government, through its implications on fiscal budget risk management. A “Value at Risk” methodology is proposed to compare alternative denominations regarding currency and...

This paper assesses the efficiency of the current Inflation Targeting (IT) scheme in place at the Central Bank of Chile. Using a small macroeconomic model of the Chilean economy, our main results are as follows: (i) an efficient monetary policy requires a bias towards output stabilization around...

We empirically assess the contribution of international reserves vis- à -vis institutional variables in reducing the risk of a currency crisis. We find that the ratio of reserves to short-term debt is robust in explaining international crisis, even after controlling for financial development...

This paper describes monetary and fiscal rules used in Chile in recent years. On monetary policy rules, we present both the framework for monetary policy rate assumptions that guide the construction of inflation and growth forecasts, as well as the broad characteristics of Taylor-Type Rules that...

In this paper I explore the effect of income inequality on the real exchange rate. I consider a version of the Salter-Swan model, where income inequality affects the real exchange rate through two general equilibrium channels: (i) the aggregation of individual demands derived from non-homothetic...