Policy%20Responses%20to%20Sudden%20Stops%20in%20Capital%20Flows%3A%20The%20Case%20of%20Chile%20in%201998

Country Studies Initiative

Policy Responses to Sudden Stops in Capital Flows: The Case of Chile in 1998


CODE: CSI-150
AUTHOR(s): Valdés, Rodrigo
PUBLISHED: August 2008
LANGUAGE: English
RELATED TOPICS: Finance
DOWNLOAD FILE IN: English

Abstract:

This chapter revisits the sudden stop in capital flows episode experienced by Chile in 1998. It documents the macroeconomic environment, the macro framework in place, and the shocks that hit it. The chapter examines the policy reaction to the shocks, evaluating its most likely consequences and analyzing key policy constraints faced at the time. Finally, it describes how the economy adjusted and compares the Chilean episode with a few other recent sudden stop cases.

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