jose de gregorio : fiscal policy and macroeconomic performance opening remarks by mr jose de gregorio, governor of the central bank of chile, to the 14th annual conference of the central bank of chile “ fiscal policy and macroeconomic performance ”, santiago de chile, 21 october 2010. * * * good morning. welcome to the fourteenth installment of our annual conference, entitled fiscal policy and macroeconomic performance. year after year, this event gathers an outstanding group of economists from academic and policy circles to discuss a topic at the forefront of the global discussion, and a glance at our program makes clear that this year is no exception. this venue serves to reinforce the strong links that our bank has cultivated with top research institutions around the world. we at the bank believe that rigorous research represents a fundamental pillar in the analysis of the causes and effects of economic developments, and we thus consider it an essential input to our policy decision - making process. interaction between academics and policy makers is crucial, because it provides each with distinct feedback, permitting advances to occur at the frontier of knowledge – where they are most needed – while providing solid grounds for policy decisions. as i have mentioned, the topic of discussion during this conference will be fiscal policy and macroeconomic performance. understanding the way in which fiscal policy transmits into the economy in normal and abnormal times is key to enhance the effectiveness of monetary policy. as the world economy began feeling the brunt of the global financial crisis with the fall of lehman brothers in september 2008, public discourse in most countries called for a rapid and decisive policy response. in an unprecedented move, finance ministers from many oecd and emerging countries announced important fiscal packages in an attempt to revive the world economy. chile was no exception, where the government implemented a fiscal expansion over 2 % of gdp – in relative terms, among the largest in the world. central banks, for their part, also implemented large monetary expansion measures to stimulate the struggling economy, first by lowering interest rates to their effective lower bound, and then, in many cases, by taking additional steps aimed at providing liquidity to seized financial markets. this was also the case of chile, where we reduced interest rates to its lowest historical level, and then increase its expansionary stance by implementing nonconventional measures. this is a fundamental factor in chile ’ s current strong recovery. the present challenge is the withdrawal of the monetary stimulus at an appropriate pace, which insures that inflation forecast is consistent with our target of three percent in a two year

remarks on the chilean economy mario marcel 1 / governor, central bank of chile april 2017 1. the last few months have brought mixed signals for the chilean economy. recent data suggest the global outlook appears more favorable, particularly for emerging economies. on the one hand, activity data and expectations in advanced economies have been more upbeat, marked by better than expected performance by the manufacturing sector and a more positive outlook following years of stagnation. as a result, deflationary risks have dissipated, as inflation is expected to return to more normal levels. the federal reserve ( fed ) has continued to normalize monetary policy and monetary authorities in europe and japan appear to have set aside the possibility of additional stimulus measures. markets have incorporated these changes in their expectations avoiding any serious disruptions. along with better signs in advanced economies, activity in china has remained relatively stable, which contrasts with what had been observed one year ago. 2. in this context, there has been a generalized increase in willingness to take on risk in financial markets, increasing stock market indices, reducing sovereign risk premiums and increasing capital flows to emerging markets. commodity prices have also benefitted. copper, our main export product, has been trading at prices near its two year highs and prospects for the next few years have improved, which has had a material impact on the chilean terms of trade. thus, based on better growth prospects for our trading partners, favorable external financial conditions and increased terms of trade, the baseline scenario included in our monetary policy report published the first days of this month, considered that, for the next two years, the chilean economy will receive an external impulse higher than considered at the end of 2016, when our previous report was published ( figure 1 ). / breakfast presentation at the council of the americas, april 20th, 2017. figure 1 trading partners gdp terms of trade ( * ) ( annual change, percent ) ( index ; 2013 = 100 ) 4. 5 4. 5 4. 0 4. 0 mar. 17 mar. 17 3. 5 3. 5 dec. 16 3. 0 3. 0 dec. 16 sep. 16 sep. 16 2. 5 2. 5 avg. 00 - 07 avg. 10 - 15 ( * ) for comparison effects with the new 2013 benchmark compilation, the tot of previous reports are adjusted to 100 for 2013. source : central bank of chile. 3. on the domestic front, inflation has been consistent with what was expected in december. the annual variation of the