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BUSINESS CYCLE ACCOUNTING FOR CHILE

Published online by Cambridge University Press:  06 February 2014

Ina Simonovska  and
Ludvig Söderling
Ina Simonovska*
Affiliation:
University of California, Davis and NBER
Ludvig Söderling
Affiliation:
International Monetary Fund
*
Address correspondence to: Ina Simonovska, Department of Economics, University of California, Davis, One Shields Avenue, Davis, CA 95616, USA; e-mail: inasimonovska@ucdavis.edu.
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Abstract

We investigate sources of economic fluctuations in Chile during 1998–2007 within the framework of a standard neoclassical growth model with time-varying frictions (wedges). We analyze the relative importance of efficiency, labor, investment, and government/trade wedges for business cycles in Chile. The purpose of this exercise is twofold: (i) focusing the policy discussion on the most important wedges in the economy and (ii) identifying which broad class of models would present fruitful avenues for further research. We find that different wedges have played different roles during our studied period, but that the efficiency, labor, and investment wedges have had the greatest impact. We also compare our results with existing studies on emerging and developed economies.

Keywords

Business Cycle AccountingWedgesChile
Type
Articles
Information
Macroeconomic Dynamics , Volume 19 , Issue 5 , July 2015 , pp. 990 - 1022
Copyright
Copyright © Cambridge University Press 2014 

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