CEPAL Review

Cepal Review is the leading journal for the study of economic and social development issues in Latin America and the Caribbean. Edited by the Economic Commission for Latin America, each issue focuses on economic trends, industrialization, income distribution, technological development and monetary systems, as well as the implementation of economic reform and transfer of technology. Written in English and Spanish (Revista de la Cepal), each tri-annual issue offers approximately 12 studies and essays undertaken by authoritative experts or gathered from conference proceedings.

English Spanish

Macroeconomic shocks and policy reforms: Lessons from the 1999 downturn in Chile

This article analyses the Chilean government’s response to the 1999 recession that followed on from the Asian financial crisis, focusing on the macroeconomic policy reforms adopted and the institutional factors that influenced this response. The analysis is based on a review of previous research on the topic and suggests that some fiscal and monetary policies adopted during 1997-1998 exacerbated the effects of what were initially external shocks. However, fiscal discipline and the robust public institutions developed before and after the recession strengthened Chilean social protection policies. Specifically, public debt reduction in the 1990s, the Copper Revenue Stabilization Fund (FEC) set up in 1985, the structural surplus fiscal rule introduced in 2000 and the new monetary, exchange-rate and fiscal policy mix of that decade reduced the vulnerability of Chile to new shocks.

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