Chile’s fiscal rule as social insurance
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Date
2013
Journal Title
Journal ISSN
Volume Title
Publisher
Banco Central de Chile
Abstract
Description
Well before the Great Recession of 2009 put fiscal policy debates in the front burner commodity-exporting countries had to deal with important fiscal policy dilemmas stemming from revenue volatility and eventual depletion. Chilean policymakers have been at the forefront in this area since adopting a fiscal rule to guide government spending decisions a decade ago. This so-called structural balance rule (SBR) incorporates fluctuations in copper prices—the main source of volatility in fiscal revenues—and was instrumental in saving a large part of the windfall during the commodity boom of 2005–08. When the country went into recession in 2009 however the rule was essentially abandoned as authorities implemented a fiscal expansion beyond that suggested by the SBR.
Keywords
POLÍTICA FISCAL, CRISIS ECONÓMICA 2008, PRODUCTOS BÁSICOS