Description

In this paper, I study the potential economic impact of the 2015-18 structural reform agenda
 in Chile, using the IMF dynamic general equilibrium model (GIMF). I find that the agenda
 has the potential to significantly increase Chile’s long-run GDP, although it may have some
 negative effects in the short term. Ensuring a smooth transition to a higher productive
 potential depends on three key dimensions: the credibility of the reforms, their effectiveness
 in closing structural gaps, and their speed of implementation. Badly designed reforms that
 remove only a very small fraction of the existing structural gaps, at a slow speed, and with
 little credibility, can greatly reduce the positive impact of the reform agenda on GDP.

More publications in this series: Working Papers

More publications by: Marika Santoro