WP 57/2008: The Chilean Fiscal Rule |  |
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| Author(s): | Pedersen, Michael | | Subject: | | | Type: | Working Papers | | Year of publication: | 2008 | | Date of publication: | 09/09/2008 |
From 2001 the fiscal policy in Chile has been based on a structural surplus rule. Under
this rule, the government is committing itself to maintain its expenditures equal to the
structural revenue minus the target for the structural surplus, which is expressed in
terms of the GDP. The calculation of the structural balance depends on trend output, the
long-run copper price and the structural income from Codelco’s molybdenum sale.
While the latter is calculated with a reference price determined as the average of past
prices, panels of independent experts, who meet once a year, determine the two former.
The fact that independent experts have substantial influence on the fiscal budget makes
the Chilean fiscal rule different from similar rules applied in other countries.
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