Sebastian Edwards, 10 November 2020

While today almost every advanced nation has a flexible exchange rate regime similar to that advocated by Milton Friedman, most emerging countries continue to have ‘conventional peg’. This column draws on the historical work of Milton Friedman to examine the conditions under which he thought that flexible rates were the right system for developing countries, and when he thought that it was appropriate to have an alternative regime. 

Kym Anderson, 16 February 2020

Global alcoholic beverage markets have changed dramatically in recent years due to globalisation, income growth in emerging economies, changes in individual preferences, policy initiatives to curb socially harmful drinking, and, in particular, the dual trade policy shocks of Brexit and the US’s unilaterally imposed discriminatory tariffs. This column provides an overview of the major trends and projects the possible effects of Brexit and the US tariffs on the global alcohol market. It concludes that both shocks would reduce world trade in wine. Even countries not targeted by US tariffs can be worse off if those tariffs sufficiently reduce global consumption. 

Dina Pomeranz, 14 February 2020

Evidence from Chile shows how the value-added tax (VAT) can facilitate tax enforcement by generating paper trails on transactions between firms.

Sebastian Edwards, 30 November 2019

In a few decades, Chile experienced dramatic economic growth and the fastest reduction of inequality in the region. Yet, many Chilean citizens feel that inequality has greatly increased. Such feelings of 'malestar' triggered the violent social unrest of October 2019. This paper explains this seeming paradox by differentiating ‘vertical’ (income) inequality from ‘horizontal’ (social) inequality. It argues that the neoliberalism that created Chile’s economic growth is no longer effective and that Chile may be headed towards adopting a welfare state model.


The Millennium Institute in Market Imperfections and Public Policy (MIPP) is organizing the 2019 Workshop on Market Frictions and Macroeconomics on November 28-29, 2019 in Santiago, Chile.
We welcome theoretical, empirical, and mixed contributions in a variety of topics, including, but not limited to, labor, monetary, financial, housing, product, and marriage markets.
Professor Jan Eeckhout (U. College London / Pompeu Fabra) has already confirmed his participation.
If you would like to present a paper, please send a copy of your work in PDF format to [email protected] no later than August 15th, 2019.
Authors of accepted papers will be notified by September 15th, 2019. Partial funding for travel and hotel expenses will be available subject to budgetary constraints. Earlier notification is possible depending on individual needs.
Participants are expected to register before September 30th, 2019.
We look forward to seeing you in Santiago!

Seth Zimmerman, 08 October 2018

Graduates of top universities hold a large share of leadership positions in big firms. At the same time, elite universities are aiming to expand access to middle- and low-income students. Yet, it is unclear whether the benefits of attending top universities accrue to students from poor backgrounds. This column examines new evidence from Chile and finds that admission to highly selective, business-focused degree programmes has very large effects on the rates at which male students from wealthy backgrounds attain top jobs and incomes, but little or no effect for female students and non-wealthy male students.

Benjamin Villena-Roldán, Stefano Banfi, 17 February 2018

Researchers often pick a random or a directed search model based on convenience and theoretical implications, but distinguishing between the two is important as many labour market regulations may be welfare-improving under random search, but not under directed search. This column uses data from Chile to show that job-seekers respond to information posted by employers, suggesting that policy design should consider the prescriptions of directed search models.  However, the evidence also shows that relevant features of these markets are not well captured by existing models.

, 09 December 2016

Economic shocks can turn into crises if they are of large magnitudes and long-lasting. In this video, Andrés Solimano discusses the case of Chile, in order to identify the mechanisms needed to avoid shocks turning into crises. This video was recorded at the UNU-WIDER Development Conference in September 2016.

Ralph De Haas, Steven Poelhekke, 22 September 2016

The extraordinary expansion in global mining activity over the last two decades, and its increasing concentration in emerging markets, has reignited the debate over the impact of mining on local economic activity. This column analyses how the presence of nearby mines influences firms in eight countries with large manufacturing and mining sectors. Mines are found to out-compete local manufacturing firms for inputs, labour, and infrastructure. However, mining activity is found to improve the business environment on a wider geographic scale.

Otaviano Canuto, Francisco Carneiro, Leonardo Garrido, 01 July 2015

Industrialised and developing countries have differing fiscal strategies for dealing with the business cycle. But are countries’ strategies different according to whether they are industrialised? This column presents new evidence suggesting that the picture is complex. Procyclical fiscal policies remain the norm amongst most non-industrialised developing countries, but some key developing countries have recently moved toward a counter-cyclical stance as a result of strengthening institutions.

Sebastian Edwards, 04 February 2015

The conventional ‘trilemma’ view is that countries that allow free capital flows can still pursue independent monetary policies as long as they allow flexible exchange rates. This column examines the pass-through of Federal Reserve interest rates to policy rates in Chile, Colombia, and Mexico. The author concludes that, to the extent that central banks take into account other central banks’ policies, there will be ‘policy contagion’ and that, even under flexible rates, monetary policy will not be fully independent.

Christian Daude, 10 December 2012

Latin American central banks are facing new challenges in the form of unprecedented levels of uncertainty and exchange rate appreciation pressures. This column, focusing on Brazil, Chile, Colombia, Peru and Mexico, argues that there is an overestimation of the potential output in several Latin American economies, a lack of an explicit policy direction from central banks, and lacklustre frameworks for macroprudential policy. Although inflation targeting has served countries in Latin America well, significant risks remain.

Carmen Reinhart, Kenneth Rogoff, Nicolas Magud, 24 March 2011

Capital controls are back on the table. But the existing literature offers conflicting and sometimes confusing insights. This column provides a meta-analysis of 37 empirical studies with the aim of exposing some common ground. It finds that capital controls on inflows make monetary policy more independent, alter the composition of capital flows, reduce real-exchange-rate pressures, but they do not reduce the volume of net flows.

Eduardo Levy Yeyati, 20 January 2011

The global crisis has reignited debate on the desirability of capital controls. This column examines evidence from Argentina and Chile and argues that capital controls can be effective, but that their effectiveness and efficiency varies. It adds that controls need to be considered as part of a macro-prudential toolkit to prevent asset inflation and overvaluation that is costly to revert in the down cycle.

Gonzalo Reyes, Jan van Ours, Milan Vodopivec, 09 February 2010

How can policymakers provide unemployment insurance while minimising adverse incentives? This column presents new evidence from Chile suggesting unemployment insurance savings accounts can increase job-finding rates. This provides a strong endorsement of the savings account component to reform traditional unemployment insurance programmes.


CEPR Policy Research