Determinantes de la Inversión en Chile

The paper reviews recent evidence related to the evolution of investment and its determinants in Chile and its relationship to medium- and long-term growth. It also reviews the main theoretical views that relate investment and growth, as well as international evidence. In Chile since 1990, gross fixed capital formation has been around 25% of GDP, with a steady increase in the weight of machinery. Investment has responded to its fundamentals such as the cost of capital and growth perspectives. It has also been highly procyclical. The paper concludes with a review of studies about the tax on retained earnings.

A Currency of One's Own? An Empirical Investigation on Dollarization and Independent Currency Unions

In this paper we analyze whether common currency' countries that is, dollarized and independent currency union countries have outperformed countries that have a currency of their own. The paper is empirical and estimates jointly the probability of being a common currency country and outcome' equations for growth, volatility and inflation. We find that both type of common currency countries have lower inflation than countries with a domestic currency. Dollarized countries have lower growth and higher volatility than countries with a domestic currency. Currency unions, on the other hand, have higher growth and higher volatility than countries with a currency of their own.

Do Exchange Rate Regimes Matter For Inflation And Exchange Rate Dynamics? The Case Of Central America.

This paper makes an empirical contribution to the discussion on the optimal exchange rate regime. Using as astudy case the experience of the Central American countries, we compare the dynamics of the Real Exchange Rate (RER) and inflation persistence between dollarized economies and countries with some degree of exchange rate flexibility. Our results show that the two dollarized countries in the region, El Salvador and Panama, are quite different in terms of RER and inflation dynamics. While in El Salvador the RER spends more time away from the equilibrium level than the non-dollarized countries in the region, the opposite is true for Panama. We also find that inflation persistence in El Salvador is similar to that of the other countries, but smaller in Panama. This leads us to the conclusion that some degree of exchange rate flexibility helps countries to have a RER more aligned with its fundamentals. Nevertheless, a long-lived, highly credible dollarized economy, like Panama, can reduce inflation persistence to such an extent that RER misalignments are actually less frequent than in countries with more flexible exchange rate regimes.

Dollarization and Economic Performance: What Do we Really Know?

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 training evaluation literature. Our findings suggest that inflation has been significantly lower in dollarized nations than in non-dollarized ones. We also find that dollarized nations have had a lower rate of economic growth than non-dollarized ones. Finally, we find that macroeconomic volatility is not significantly different across dollarized and non-dollarized economies. We conjecture that the lower rate of economic growth in dollarized countries is due, at least in part, to these countries’ difficulties in accommodating external disturbances, such as major term of trade and capital flows shocks.

Independent Currency Unions, Growth, and Inflation

During the last few years, there has been a renewed interest in currency unions. This is the result both of the recent wave of currency crises as well as the implementation of the euro. In this paper, the authors use panel data for 1970-98 to investigate economic performance under historical independent currency unions (ICUs) along three dimensions: GDP per capital growth, growth volatility, and inflation. They use a treatment effects model that estimates jointly the probability of having a common currency and its effect on performance. The authors find that ICU countries have had a significantly lower rate of inflation, but macroeconomic volatility has been higher. Also, ICU countries have grown faster than with currency nations, but the East Caribbean Currency Area countries are found to be the driving force behind this result.

Strict Dollarization and Economic Performance: An Empirical Investigation

In this paper we analyze the macroeconomic record of 'strictly dollarized' economies. In particular we investigate whether dollarized countries have historically exhibited faster growth and lower volatility than countries with a domestic currency. We analyze this issue by using a treatment regression analysis that estimates jointly the probability of being a dollarized country, and outcome equations. Our analysis indicates that the probability of being a dollarized country depends on regional, geographical, political and structural variables. Our results also suggest GDP per capita growth has not been statistically different in dollarized and in non-dollarized ones. We also find that volatility has been significantly higher in dollarized than in non-dollarized economies. These results are robust to the estimation technique, and to the sample used.

The Monetary Transmission Mechanism in Chile: A Medium-Sized Macroeconometric Model

This paper proposes and estimates a macroeconomic model of the Chilean economy. The model is designed as a short- and medium-term inflation-forecasting tool, which precisely identifies the transmission mechanism followed by monetary policy in Chile. The model specifies short-run dynamics as well as long-run equilibrium conditions. Cointegration and error correction techniques are used to estimate the relevant parameters, while some relations are calibrated. The model includes the main components of aggregate demand and external accounts, a supply-side block that relies on a standard production function, a specification for asset prices, and a wage/markup/price and labor market block. The short- and long run interdependence among each of these factors is taken into account to yield a forward-looking macroeconomic dynamic equilibrium. The key steadystate relative prices, such as the long-run real interest rate, the real exchange rate, and the sovereign risk premium, are endogenously determined. The model is used to explore and quantify the effects of monetary policy on inflation and how monetary policy is transmitted to inflation. The results obtained here are compared to the results of other simpler but less informative models, such as VAR and a smaller scale macroeconomic model, based on Phillips curves. The paper analyzes the response of some key macroeconomic variables to a number of permanent shocks.

Determinantes del Índice de Percepción de la economía

The movements of the Index of Perception of Economy (IPEC) can be associated to changes in macroeconomic variables such as domestic activity, prices or wages. This document examines the importance of these variables in explaining the fluctuations of this index. When making estimations using series to mixed frequency (i.e., with monthly and quarterly data), the variables that are found to determine the evolution of the IPEC are: the variation in the real wage index, the CPI of micros, the Imacec, and employment, as well as the annual variation of the number of vacancies and unemployment according to the INE. These variables are robust to changes of specification.Los movimientos del Índice de Percepción de la Economía (IPEC) pueden asociarse a cambios en variables macroeconómicas tales como la actividad interna, los precios o los salarios. En este documento se examina la importancia de estas variables para explicar las fluctuaciones de dicho índice. Al realizar estimaciones usando series a frecuencia mixta, esto es, combinando datos trimestrales y mensuales, se encuentra que las variables que determinan la evolución del IPEC son los movimientos del índice de remuneraciones real, del IPC de micros, del Imacecy del empleo, y la variación anual de las vacantes y del desempleo según el INE. Dichas variables son robustas a cambios de especificación.Departamento de Economí

Determinantes del Índice de Percepción de la economía

The movements of the Index of Perception of Economy (IPEC) can be associated to changes in macroeconomic variables such as domestic activity, prices or wages. This document examines the importance of these variables in explaining the fluctuations of this index. When making estimations using series to mixed frequency (i.e., with monthly and quarterly data), the variables that are found to determine the evolution of the IPEC are: the variation in the real wage index, the CPI of micros, the Imacec, and employment, as well as the annual variation of the number of vacancies and unemployment according to the INE. These variables are robust to changes of specification.Los movimientos del Índice de Percepción de la Economía (IPEC) pueden asociarse a cambios en variables macroeconómicas tales como la actividad interna, los precios o los salarios. En este documento se examina la importancia de estas variables para explicar las fluctuaciones de dicho índice. Al realizar estimaciones usando series a frecuencia mixta, esto es, combinando datos trimestrales y mensuales, se encuentra que las variables que determinan la evolución del IPEC son los movimientos del índice de remuneraciones real, del IPC de micros, del Imacecy del empleo, y la variación anual de las vacantes y del desempleo según el INE. Dichas variables son robustas a cambios de especificación.Departamento de Economí