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On the Determinants of the Chilean Economic Growth

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  • Chumacero Romulo
  • Fuentes Rodrigo
Abstract
This paper presents several methodologies for understanding the Chilean growth process. By using univariate time series representations, we find that the Chilean data is more consistent with exogenous than with endogenous growth models. Growth accounting exercises show that the mild growth rates of the sixties are mainly due to the accumulation of human and physical capital, while the booms of the mid seventies and the one from 1985 until 1998 are mainly due to TFP growth. We also find that among the most important determinants of the evolution of TFP are the evolution of terms of trade, improvements on the quality of capital, and the presence of distortions. In fact, distortions do not only eliminate the positive effects of improvements on the quality of capital, but also precede the evolution of technology shocks and increase their volatility. A dynamic stochastic general equilibrium model that explicitly incorporates the relative price of investment with respect to consumption goods, terms of tra de, and distortionary taxes is able to successfully replicate the impulse-response functions found on the data. This exercise suggests that distortions play a key role in explaining the growth dynamics of the Chilean experience.
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  • Chumacero Romulo & Fuentes Rodrigo, 2010. "On the Determinants of the Chilean Economic Growth," EcoMod2002 330800018, EcoMod.
    • Handle: RePEc:ekd:003308:330800018
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    Cited by:

    1. Roberto Álvarez & Rodrigo Fuentes, 2004. "Patterns of Specialization and Economic Growth in Chile by Sector," Working Papers Central Bank of Chile 288, Central Bank of Chile.
    2. Claudia De la Huerta & Javier Garcia-Cicco, 2016. "Commodity Prices, Growth and Productivity: a Sectoral View," Working Papers Central Bank of Chile 777, Central Bank of Chile.
    3. Dierk Herzer, 2005. "Does Trade Increase Total Factor Productivity: Cointegration Evidence for Chile," Ibero America Institute for Econ. Research (IAI) Discussion Papers 115, Ibero-America Institute for Economic Research.
    4. Roberto Duncan, 2003. "Floating, Official Dollarization, and Macroeconomic Volatility:An Analysis for the Chilean Economy," Working Papers Central Bank of Chile 249, Central Bank of Chile.
    5. Klaus Schmidt-Hebbel, 2006. "Chile's Economic Growth," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 43(127), pages 5-48.
    6. Roberto Duncan, 2005. "How Well Does a Monetary Dynamics Equilibrium Model Account for Chilean Data?," Central Banking, Analysis, and Economic Policies Book Series, in: Rómulo A. Chumacero & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (S (ed.),General Equilibrium Models for the Chilean Economy, edition 1, volume 9, chapter 6, pages 189-220, Central Bank of Chile.
    7. Rómulo A. Chumacero & Klaus Schmidt-Hebbel, 2005. "General Equilibrium Models: An Overview," Central Banking, Analysis, and Economic Policies Book Series, in: Rómulo A. Chumacero & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (S (ed.),General Equilibrium Models for the Chilean Economy, edition 1, volume 9, chapter 1, pages 001-027, Central Bank of Chile.
    8. J. Rodrigo Fuentes S. & Verónica Mies M., 2005. "Looking at Chile’s Economic Dvelopment From an International Perspective," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 8(1), pages 7-33, April.
    9. Rodrigo Vergara & Rosario Rivero, 2006. "Productividad Sectorial en Chile: 1986-2001," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 43(127), pages 143-168.
    10. Gachet, Ivan & Maldonado, Diego & Oliva, Nicolas & Ramirez, Jose, 2011. "Hechos Estilizados de la Economía Ecuatoriana: El Ciclo Económico 1965-2008 [Stylized Facts of the Ecuadorian Economy: The Economic Chicle 1965-2008]," MPRA Paper 30280, University Library of Munich, Germany.
    11. Rodrigo A. Cerda & José Tomás Valente, 2022. "The role of capital taxation on the business cycle: the case of Chile, 1960–2019," Economic Change and Restructuring, Springer, vol. 55(1), pages 83-108, February.
    12. Verónica Mies & Rodrigo Fuentes, 2005. "Mirando el Desarrollo Económico de Chile: Una Comparación Internacional," Documentos de Trabajo 287, Instituto de Economia. Pontificia Universidad Católica de Chile..
    13. Iffat Ara, 2004. "Is Pakistan’s Manufacturing Sector Competitive?," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 43(4), pages 685-706.
    14. Francisco Gallego & Norman Loayza, 2002. "The Golden Period for Growth in Chile. Explanations and Forecasts," Central Banking, Analysis, and Economic Policies Book Series, in: Norman Loayza & Raimundo Soto & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Editor) (ed.),Economic Growth: Sources, Trends, and Cycles, edition 1, volume 6, chapter 13, pages 417-464, Central Bank of Chile.
    15. Dierk Herzer, 2005. "Trade composition and total factor productivity: Evidence for Chile," Ibero America Institute for Econ. Research (IAI) Discussion Papers 116, Ibero-America Institute for Economic Research.
    16. Francisco Gallego, 2006. "Skill Premium in Chile: Studying the Skill Bias Technical Change Hypothesis in the South," Working Papers Central Bank of Chile 363, Central Bank of Chile.
    17. Claudio Candia & Medardo Aguirre & Natalia Correa & María J. Herrera, 2016. "La productividad total de factores en el sector manufacturero chileno," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 18(35), pages 229-255, July-Dece.
    18. Marcelo Ochoa & Patricio Valenzuela, 2004. "Impactos de un Shock Externo en un Modelo Estocástico de Equilibrio General para una Economía Abierta: El Caso de Chile," Macroeconomics 0407007, University Library of Munich, Germany.
    19. J. Felipe Córdova, 2010. "Conventional Calibration Versus EDF Calibration," Working Papers Central Bank of Chile 589, Central Bank of Chile.
    20. Rodrigo Fuentes & Mauricio Larraín & Klaus Schmidt-Hebbel, 2004. "Sources of Economic Growth and Total Factor Productivity in Chile," Working Papers Central Bank of Chile 287, Central Bank of Chile.
    21. International Monetary Fund, 2004. "Chile: Selected Issues," IMF Staff Country Reports 2004/292, International Monetary Fund.
    22. Rómulo A.Chumacero & J.Rodrigo Fuentes, 2006. "Economic growth in Latin America: structural breaks or fundamentals," Estudios de Economia, University of Chile, Department of Economics, vol. 33(2 Year 20), pages 141-154, December.
    23. Chumacero, Romulo A. & Fuentes, J. Rodrigo, 2006. "Chilean growth dynamics," Economic Modelling, Elsevier, vol. 23(2), pages 197-214, March.

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