We examine the macroeconomic effects of the energy transition, focusing on the impact of oil prices on GDP, productivity and inflation. We find that energy dependence on fossil fuels increases vulnerability to oil price shocks, negatively affecting Total Factor Productivity (TFP). Using the...

There is consensus that Chile has made substantial progress in its macroeconomic policies during the last 30 years. However, there is no comprehensive and formal quantification of the macroeconomic stabilization gains in terms of the critical dimensions in the conduct of monetary and fiscal...

This article analyzes firm dynamics when the entrepreneurs have limited capacity to comply with their financial contracts. We characterize the optimal constrained contract under this imperfection in the presence of productivity and interest rate fluctuations. We show that under the optimal...

We calculate and compare optimal monetary policy (MP) rules for a simple economy under alternative central bank objective (loss) functions. We compare both soft- and hard-edges range (zone) targeting as well as asymmetric loss-functions to a quadratic loss case. The latter represents the...

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,...