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Long-term Gain, Short-Term Pain

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by Marika Santoro
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Long-term Gain, Short-Term Pain by Marika Santoro

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.

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Ebook Details
Pages: 35
Size: 4.0 MB
Date published:   2015
ISBN: 9781513518657 (DRM-EPUB)
9781513564111 (DRM-PDF)

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Nonfiction > Business & Economics > International > Economics

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