The Chilean Fiscal Rule.
Chile, the southernmost country in South America, hosts almost 20 million people and has the highest real GDP per capita in the region. Historically, Chile's economy has relied on commodities (mainly copper) as a source of exports and fiscal revenues. In 2000, in an attempt to prevent excessive adjustments in periods of recession or unsustainable expenditure levels in periods of prosperity, the government implemented a fiscal rule to stabilize public expenditures over the business cycle.
Collection: IESE (España)
Ref: ECON-430-E
Format: PDF
Number of pages: 12
Publication Date: Nov 23, 2022
Language: English
Description
Chile, the southernmost country in South America, hosts almost 20 million people and has the highest real GDP per capita in the region. Historically, Chile's economy has relied on commodities (mainly copper) as a source of exports and fiscal revenues. In 2000, in an attempt to prevent excessive adjustments in periods of recession or unsustainable expenditure levels in periods of prosperity, the government implemented a fiscal rule to stabilize public expenditures over the business cycle.
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Geographic Setting: Chile
Industry Setting: Public Sector
Learning Objective
The goal of this case is to examine countercyclical fiscal policy and understand the benefits and costs of rule-based and discretionary-based policy.
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