Eduardo Olaberria
OECD, Macro Economics/ International Relations, Department Member
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Dado que los auges en los precios de las viviendas anticipan (con una alta probabilidad) las crisis financieras, entender sus causas es muy relevante desde la perspectiva de politica economica. Aunque la teoria sugiere que los grandes... more
Dado que los auges en los precios de las viviendas anticipan (con una alta probabilidad) las crisis financieras, entender sus causas es muy relevante desde la perspectiva de politica economica. Aunque la teoria sugiere que los grandes flujos de capital estan entre los principales factores detras de estos auges, la evidencia empirica sobre esta asociacion es, por ahora, insuficiente. Este trabajo proporciona evidencia metodica sobre la relacion entre las entradas de capitales y los auges en precios de la vivienda, centrandose especificamente en la composicion de los flujos de capital. Los resultados muestran que la asociacion positiva entre las entradas de capital y los auges en precios de la vivienda descrita en estudios previos se explica principalmente por los prestamos bancarios y otros flujos de deuda. Ademas, encontramos evidencia que sugiere que esta asociacion es menor en paises con regimenes de tipo de cambio mas flexibles y con mejor calidad de las instituciones. Finalmente, no encontramos evidencia robusta que respalde la idea de que restringiendo el desarrollo financiero o introduciendo controles de capital se pueda reducir la asociacion entre grandes entradas de capital y los auges en precios de las viviendas.
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This paper analyzes the recent evolution and the level of international reserves in Chile using complementary approaches. First, we construct a set of international reserves indicators suggested by the literature for a group of developed... more
This paper analyzes the recent evolution and the level of international reserves in Chile using complementary approaches. First, we construct a set of international reserves indicators suggested by the literature for a group of developed and emerging economies. Second, we estimate a demand for international reserves model using a panel of 47 countries. Finally, we parameterize two theoretical models in order to estimate the level of international reserves that would be needed to withstand a financial crisis. The analysis shows that, although during the period of floating exchange rate the level of reserves in Chile has fallen significantly, it has remained at an adequate level for reasonable degrees of risk suggested by theoretical models. However, by the end of 2010, the level of reserves was below those of other emerging countries with floating exchange rate regimes.
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Policy makers in Latin America and the Caribbean (LAC) often complain that poor fiscal performance in their countries is a result of a high degree of spending rigidity. Despite being a common complaint, the issue has remained largely... more
Policy makers in Latin America and the Caribbean (LAC) often complain that poor fiscal performance in their countries is a result of a high degree of spending rigidity. Despite being a common complaint, the issue has remained largely ignored by the literature because of the lack of adequate measures of rigidity that allow cross-country and time series comparability. This report helps close this gap by introducing a new measure of spending rigidities that can be easily applied to multiple countries. It focuses on the categories of spending that are naturally inflexible—wages, pensions, transfers to subnational governments, and debt service—and separates them into two components: structural and nonstructural. The structural component is determined by economic, demographic, and institutional fundamentals. The nonstructural component is determined by short-run transitory factors associated with business and political cycles. The degree of rigidity of spending is then proxied by the rati...
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ABSTRACT There is a large theoretical literature claiming that Central Banks should set the nominal interest rate equal to zero -a result known as the Friedman Rule. However, in the real world we see that all Central Banks deviate from... more
ABSTRACT There is a large theoretical literature claiming that Central Banks should set the nominal interest rate equal to zero -a result known as the Friedman Rule. However, in the real world we see that all Central Banks deviate from this rule and set interest rates that are signi…cantly dierent from zero. In par- ticular, Central Banks set higher interest rates in countries with less developed …nancial markets. The purpose of this paper is to reconcile the prescription of the theory of optimal monetary policy with the empirical evidence, by incor- porating the role played by …nancial intermediaries in the creation of inside money. With this goal, I develop a currency-substitution model where …nancial intermediaries supply deposits that can be used to buy goods and services. In order to produce deposits, Financial Intermediaries must incur a positive cost which, together with a transaction technology that uses currency and deposits as imperfect substitutes, generates a distortion in the consumption-leisure de- cision that increases the implicit eective price of consumption. This implicit price can be reduced by moving away from the Friedman Rule. In other words, is optimal for Central Banks to set a positive interest rate. Furthermore, the less e¢ cient the …nancial intermediaries are, the higher is the nominal interest rate set by the country's central bank, which helps explain why central banks in countries with less developed …nancial markets set higher interest rates.
ABSTRACT This paper studies the impact of different types of epidemics on the long-run and short-run growth rate of GDP per capita. I argue that, although some epidemics might have a negative effect on growth by increasing volatility... more
ABSTRACT This paper studies the impact of different types of epidemics on the long-run and short-run growth rate of GDP per capita. I argue that, although some epidemics might have a negative effect on growth by increasing volatility through their short-run destabilizing effects on macroeconomic variables, other epidemics may generate opportunities to implement needed health care reforms. These reforms could, potentially, increase the incentives to invest in human capital and therefore improve long run growth. First, I show using a standard endogenous growth model that an epidemic may cause the growth rate of per capita GDP to either increase or decrease. Hence, I claim that the net impact of epidemics upon economic growth is an empirical question. To settle this issue, I use a dataset for 94 countries covering the period 1961-2005. Using various econometric techniques, I find that different types of epidemics have different effects on economic growth. In particular I find that cholera epidemics increase growth both in the short and long run, while influenza epidemics produce a negative effect on short-run growth, but no effect in the long-run. Finally, I argue that these results are consistent with the insights from the standard model of endogenous economic growth.
