Structural Volatility in Chile: A Policy Report

52 Pages Posted: 21 Apr 2011

See all articles by Ricardo J. Caballero

Ricardo J. Caballero

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: August 2000

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., Structural Volatility in Chile: A Policy Report (August 2000). IDB Working Paper No. 352, Available at SSRN: https://ssrn.com/abstract=1817220 or http://dx.doi.org/10.2139/ssrn.1817220

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