General equilibrium dynamics of external shocks and policy changes in Chile
This paper explores Chile’s macroeconomic dynamics with the help of a general equilibrium model parameterized for the Chilean economy. The model is based on microanalytic foundations, and its basic relations are derived from intertemporal optimization by a group of forward-looking agents endowed wit...
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| Main Authors: | , , |
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| Format: | Artículo |
| Language: | eng |
| Published: |
Banco Central de Chile
2019
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| Subjects: | |
| Online Access: | https://hdl.handle.net/20.500.12580/3695 |
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| Summary: | This paper explores Chile’s macroeconomic dynamics with the help of a general equilibrium model parameterized for the Chilean economy. The model is based on microanalytic foundations, and its basic relations are derived from intertemporal optimization by a group of forward-looking agents endowed with rational expectations. The economy’s short-term equilibrium thus depends on the current and anticipated future paths of policy and external variables. The model also introduces critical real-world features—such as short-run wage rigidities and a group of myopic agents—that generate deviations from the frictionless full-employment equilibrium of the unconstrained neoclassical paradigm. |
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