Macroeconomics Case Study

'Chilean Model': What it Takes to Grow at 5.5% P.A.?

OR

Abstract:
Chile, the world's largest copper producing country, had initiated a number of structural and fiscal reforms over the years. In 1990, the Chilean government introduced the Growth and Equity Model with the objective of attaining macroeconomic stability and improving socio-economic justice in Chile. By implementing this model, the government tried to achieve competitiveness on both the domestic and the foreign market, along with overall growth of social equity and democracy. In 2000, the government introduced a counter-cyclical fiscal policy, which was based on the rule that if the Chilean economy grew at 5.5% a year, then it would show a fiscal surplus of 1% of GDP (gross domestic product).

Pedagogical Objectives:

• To discuss the Chilean Model for attaining economic stability
• To discuss how Economic reforms developed Chilean financial system.

Keywords : Chilean model, Copper exports, Growth and Equity Model, Fiscal Policy Case Study, Counter-cyclical fiscal policy, Economic reforms