Mendoza, Enrique, “Fisherian Transmission and Efficient Arbitrage under Partial Financial Indexation,” IMF Staff Papers, Vol. 39 (March 1992).
Mendoza, Enrique and Fernando Fernández, “Monetary Transmission and Financial Indexation: Evidence from the Chilean Economy,” IMF Paper on Policy Analysis and Assessment, PPAA 94/17 (1994).
Rojas, Patricio, “El Dinero como un Objetivo Intermedio de Política Monetaria en Chile: Un Análisis Empirico,” Cuadernos de Economia, Vol. 30 (1993), pp. 139-178.
See Chapter IV for a description of these rescue operations.
Broader aggregates proved more stable but they were weakly related with the target (inflation) and the task of controlling them was increasingly difficult.
The “unidad de fomento” (UF) that was introduced in 1967 is a unit of account linked to the consumer price index with a one-month delay.
For a full description of the operations of indexed contracts in Chile, see Mendoza (1992). For an analysis of the difference between interest rates on UF and real ex-post interest rates, see Mendoza and Fernández (1994).
As of January 6, 1994, time deposits are subject to a 3.6 percent reserve requirement and demand deposits are subject to 9 percent.
The decline in inflation was both in tradeable and nontradeable goods and there was also a deceleration of nominal wage growth.
On Friday, June 23, 1995, the Central Bank lowered the rate on the daily deposits at the Central Bank to 5 percent.
The percent rates on Central Bank rediscounts were reduced from 6.3 to 5.7 for the first tranche; from 6.7 to 6.0 for the second tranche; and from 7.1 to 6.5 for the third tranche. The interest rate in the first auction of 90-day PRBCs (Tuesday, May 30) declined from 6.1 percent to 5.7 percent. On August 10 the rate on PRBCS was 5.6 percent.
Because the rate of the PRBCs is now market determined, the reference real rate for the PDBCs is now the clearing rate of the last auction of PRBCs.