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Structural Volatility in Chile: A Policy Report

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  • Caballero, Ricardo J.

Abstract

This paper identifies Chile's economic weaknesses and offers policy recommendations for increasing stability. Current problems include weak international financial links, a Central Bank mandate that is ill-designed to deal with terms of trade shocks, a propensity to waste scarce liquidity in the banking system; and limited development of financial markets. The paper's policy recommendations include improving external financial links, molding terms of trade contingencies into anti-cyclical policies, Improving liquidity aggregation through and within the banking sector during crises, and improving the liquidity and immediacy of domestic financial instruments.

Suggested Citation

  • Caballero, Ricardo J., 2000. "Structural Volatility in Chile: A Policy Report," IDB Publications (Working Papers) 1323, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:1323
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    References listed on IDEAS

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    1. Ricardo Caballero & Arvind Krishnamurthy, 1998. "Emerging Market Crises: An Asset Markets Perspective," Working papers 98-18, Massachusetts Institute of Technology (MIT), Department of Economics.
    2. Philippe Aghion & Abhijit Banerjee & Thomas Piketty, 1999. "Dualism and Macroeconomic Volatility," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(4), pages 1359-1397.
    3. Rajan, Raghuram G & Zingales, Luigi, 1998. "Financial Dependence and Growth," American Economic Review, American Economic Association, vol. 88(3), pages 559-586, June.
    4. Ricardo J. Caballero, 2000. "Structural Volatility in Mexico: A Policy Report," Research Department Publications 4209, Inter-American Development Bank, Research Department.
    5. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December.
    6. Blommestein, Hans J., 1997. "Institutional Investors, Pension Reform and Emerging Securities Markets," IDB Publications (Working Papers) 6094, Inter-American Development Bank.
    7. Calvo, Guillermo A. & Mendoza, Enrique, 1998. "Empirical Puzzles of Chilean Stabilization Policy," Working Papers 98-02, Duke University, Department of Economics.
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    Cited by:

    1. Trofimov, Ivan D., 2018. "Income terms of trade and economic convergence: Evidence from Latin America," MPRA Paper 87598, University Library of Munich, Germany.
    2. Chang-Tai Hsieh & Jonathan A. Parker, 2007. "Taxes and Growth in a Financially Underdevelopped Country: Evidence from the Chilean Investment Boom," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2007), pages 1-54, August.
    3. Caballero, Ricardo J., 2000. "Structural Volatility in Argentina: A Policy Report," IDB Publications (Working Papers) 1324, Inter-American Development Bank.
    4. Chang-Tai Hsieh & Jonathan A. Parker, 2007. "Taxes and Growth in a Financially Underdeveloped Country: Evidence from the Chilean Investment Boom," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2007), pages 1-53, August.
    5. Ricardo J. Caballero, 2000. "Inestabilidad estructural en Argentina: un informe de políticas," Research Department Publications 4214, Inter-American Development Bank, Research Department.
    6. Syed Hasan & Ian Sheldon, 2016. "Credit Constraints, Technology Choice and Exports: A Firm-level Study for Latin American Countries," Review of Development Economics, Wiley Blackwell, vol. 20(2), pages 547-560, May.
    7. Ivan Trofimov, 2021. "Income terms of trade and economic convergence: Evidence from Latin America," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 46(2), pages 41-67, June.

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