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Recent global trends show high levels of households' indebtedness in developed and emerging economies. This paper proposes a method applicable in those economies where a household financial survey and interest rate caps exist. The method applies to the country with the most indebted households in Latin America, Chile. The results state that: (i) the same debt threshold does not apply to all households as variables such as income affect it; (ii) the debt threshold increases with households' income level; (iii) the presence of mortgage debt increases the debt thresholds; (iv) Chilean households overindebted are more than a quarter. [ABSTRACT FROM AUTHOR]

This paper analyzes the effects of new technologies oriented to automation in the Chilean labor market. A general equilibrium model is used, in which the investment in robotic capital and the investment in traditional capital are considered separately, allowing the study of the effects of complementarity and substitution that are verified in relation to the labor factor. In particular, the model treats robotic capital as a direct substitute for labor, while incorporating traditional capital as complementary to it. By subjecting the economy to shocks in robotic capital prices, the effects on consumption, employment, wages and GDP can be studied. The results indicate that a fall in the international purchase price of robotic capital has a negative impact on employment as well as on the product. The exercises carried out in this study indicate that a decrease in the international price of robotic capital by 1 %, under conditions of high replacement rates between employment and robots, produces a drop in employment and wages of 0.05% if the change is transitory and of 0.25% if it is permanent due to an increase in imports of robotic capital. [ABSTRACT FROM AUTHOR]

The present paper investigates the dynamics in the Chilean labor market during 1996 and 2016. It estimates the unemployment flows following Shimer (2012) in order to characterize labor market variables in the bussisnes cycle. According to our results recessionary increases in unemployment are driven by the outflow from unemployment rather than the inflow. Using structural vector autorregresive analysis (SVAR), we estimate a model to identify several shocks that affect the economy and labor market. An aggregate supply shock generates greater variance in the inflow also shows grater persistence to the variety of shocks examined; meanwhile an aggregate demand shock generates greater variance in the outflow. [ABSTRACT FROM AUTHOR]

This paper aims to identify the key determinants of Chilean spot power price and assess their relative importance in recent price decline. To do so, we use a VAR model with weekly data between the years 2015-2016 and variance decomposition analysis to attribute variations of marginal cost to different shocks. The results show that while the availability of water for hydropower and lower fuel prices are important for explaining power spot prices, they only account for 50%-75% of the marginal cost's variance, leaving 25%-50% to other factors, such as more renewable generation and lower generation from oil sources, among other factors. [ABSTRACT FROM AUTHOR]

This paper contributes relevant empirical evidence which indicates the existence of difference in default rate of loans between male and female. It concludes that independent of types of loans, the default rate of female is less than male. Moreover this paper analyzes the effect of other variables as Married Status and Size/Income over default rate. [ABSTRACT FROM AUTHOR]

Over more than two decades, both experts and the public have considered that profits earned by Chilean Pension Fund Administrators (AFP for its acronym in Spanish) are excessively high. However, there is little known about how much the industry should earn in equilibrium. In this paper, I show that the 25.4% return on equity (ROE) earned by the AFP industry over 2006-2015 was 4.8 times as high as the 5.3% that can be explained by its exposure to market risk. In monetary terms, out of the US$ 4.4 billion earned by the AFP industry over the last decade, nearly $ 3.5 billion can be considered as “excessive”. [ABSTRACT FROM AUTHOR]

This paper proposes the inflow into non-performing loans (INPL) ratio, defined as the change in the stock of non-performing loans adjusted by write-offs and standardized by loans, as the main measure to be used for modelling the credit risk of the Chilean banking system. In particular, the paper identifies certain statistical and conceptual advantages of this measure with respect to loan loss provisions (LLP), which support this idea. First, the INPL ratio by type of credit has a greater time span than LLP. Second, the forward-looking nature of LLP --one of its main advantages over the INPL ratio-- is applicable only from 2004 onward due to various changes in Chilean reporting standards. Third, LLP is discretionary because provisioning is made on the basis of relative risk aversion of banks. Fourth, the INPL ratio produces smoother series than LLP for consumer and mortgage loans. In addition, the dynamic structure observed in both time series does not differ significantly. The econometric model estimated for the period January 1997 to June 2010 shows that the INPL ratio has statistically significant relations with macroeconomic aggregates such as the annual output growth, the short and long term interest rates, the annual inflation rate, the peso-dollar exchange rate, and non expected credit growth. Finally, the out-of-sample forecasts indicate differences between the actual and projected INPL ratios that are economically significant only in the case of mortgage credit. For the remaining portfolios, the evolution of this ratio during the period of July 2008 to June 2010 does not differ significantly from that predicted by the econometric model. [ABSTRACT FROM AUTHOR]

This paper detects structural similarities among several regions in Chile, in particular those that can be compared to the Magellanic and the Chilean Antarctica region: the regions Tarapacá, Libertador Bernardo O'Higgins Riquelme, Bío- Bío and Los Lagos. This exercise is particularly relevant given the economic characteristics and geographic location of all of them. This comparison would allow less advantaged regions to learn from the most successful ones. Policy makers would be able to evaluate ex-ante different policies, helping in this way the decision making process. To this end, in this paper we follow two approaches: first, we find similarities among regions using Le Masne's (1988) indicator; second, we use one in which the similarities are identified through the productive links, following the methodologies of Rasmussen (1956), Dietzenbacher and van der Linden (1997) and Soza (2007b). Once we determine which technique is better for our problem, a hierarchical cluster is applied to obtain groups of regions based on the relationship they form. It is of particular interest to identify those sectors that have the largest impact on development and analyze its productive linkages. The analysis is done using the 1996 input-output charts developed by National Institute of Statistics (INE) and the Ministry of Planning and Development (MIDEPLAN). [ABSTRACT FROM AUTHOR]

Over the last 20 years, demand for air passenger transport has grown dramatically. At the same time, the two largest domestic airlines merged and several smaller entrants exited without being able to make significant inroads. As a result, the industry is highly concentrated, with a dominant firm and a few fringe firms. This condition has generated considerable public debate about the degree of competition in the airline industry in Chile. With the purpose of contributing to the public discussion, this paper analyzes the industry from an industrial organization point of view. Specifically, the paper describes the domestic airline industry in Chile, defines the relevant market and then analyzes both the degree of concentration and entry conditions. In particular, I focus on the roles played by vertical integration, the computer reservation systems and the revenue management practice. I then evaluate self-regulation of airfares by the dominant firm and propose several public policies to increase competition. [ABSTRACT FROM AUTHOR]

This research gives the magnitude, evolution and characteristics of academic and socioeconomic polarization in the Chilean school system. After examining the importance of the education system as a means of social cohesion, we analyze the implications of distribution processes of students in their education and the main background on the Chilean education system. Furthermore, the paper conceptualizes the notion of polarization, which is related to two aspects: the alienation or distance that students have with students different from them, and the identification or identity that individuals develop with others of similar characteristics. Using SIMCE databases from the last decade, we create and formalized three different indicators of polarization to assess the school system. The results show that the degree of academic and socio-economic polarization of the Chilean school system over the last decade has been constant, and in some cases increasing. Additionally, the measurement that determines the degree of polarization shows high levels socioeconomic and academic polarization, which is related to processes of fragmentation and clustering. These results show the necessity of analyzing the impact of educational policies on the processes of social cohesion and integration in the school system. This has to consider the importance of the school as a privileged place for these goals, as well as on the development of skills, values and cognitive thinking and noncognitive skills for all children. These results have been questioned from recent conflicts that have occurred in the education sector. [ABSTRACT FROM AUTHOR]

Many authors stress the importance of relationships between sectors for the economic growth. Therefore the concept of linkage appears in the definition of two of the most traditional concepts in the input-output analysis: the "key sector" and cluster . In this paper , key products and activities are identified for the Chilean regions, the clusters that form and the structural similarity that exists between them. For this, we use a combination of so-called Important Coefficients and Fields of Influence. The results indicate that the regions that are most similar are: Tarapacá and Antofagasta, Biobío and Los Lagos. Besides the "developed" regions concept that is associated with a high division of labor and coordination between sectors, they have similar production structures and are very different from those that have "less development". [ABSTRACT FROM AUTHOR]

Trade data shows that real exchange rate fluctuates more than other variables such as consumption and GDP, and also presents significant deviations from the Law of One Price. In light of these facts, this paper develops and estimates a non-monetary DSGE model under financial autarky for the international trade of goods and services between Chile and the U.S. In this context, the higher volatility of the real exchange rate is explained by the existence of transaction costs and varying degrees of imperfect substitution in consumption between home and foreign goods which endogenously induce a home bias effect. The results reveal that the estimated transaction costs and the asymmetric home bias effect content in the data would be responsible for the low correlation between consumption in both countries and the higher real exchange rate fluctuations. Finally, the model is able to replicate much of the stylized facts observed in the data, but fails to address the Backus-Smith puzzle. [ABSTRACT FROM AUTHOR]

We elaborate an Environmentally Extended Social Accounting Matrix for the Bío Bío Region. Initially, we apply the Cross Entropy method for updating a Social Accounting Matrix of this region from 1996 to 2006. This matrix provides the basis for a discussion of multipliers, which aims to identify the productive sectors of the region that would generate the most beneficial impacts on production, equity, poverty, and environmental pollution. The paper results are used to assess the priority sectors selected by the Bio-Bio's Productive Development Agency. [ABSTRACT FROM AUTHOR]

In this paper Bayesian Vector Autoregression (BVAR) models are estimated for the Chilean economy. Under this approach, the transmission mechanisms of monetary policy and forecast exercises are studied and evaluated for the main macroeconomic variables. Then, the results are contrasted with the standard VAR models presented in the previous literature for the case of Chile and the implications for the monetary policy design are discussed. [ABSTRACT FROM AUTHOR]

This paper investigates the structure of tariffs in civil aviation in Chile and the potential cross-subsidies that it generates. We estimate the cross-subsidies that currently exist in this transport networks and find that the current tariff structure generates a number of cross subsidies between airports. In particular, the airports of La Serena, Punta Arenas and Easter Island receive a cross subsidy from the rest of the network. We suggest that it may be beneficial to impose that airports in Chile must fund all their incremental costs. The intuition for this result, which follows from an old idea presented by Adam Smith, Coase and Vickrey, among others, is that the self-financing of airports, or at least their incremental costs, can be an effective mechanism to prevent over investment in infrastructure. In the light of this discussion and the results found in this study it would be advisable to review the structure of Aeronautical Tariffs in Chile. [ABSTRACT FROM AUTHOR]

Despite success in reducing poverty over the last twenty years, inequality in Chile has remained virtually unchanged, making Chile one of the least equal countries in the world. High levels of inequality have been shown to hamper further reductions in poverty as well as economic growth and local inequality has been shown to affect such outcomes as violence and health. The study of inequality at the local level is thus crucial for understanding the economic well-being of a country. Local measures of inequality have been difficult to obtain, but recent theoretical advances have enabled the combination of survey and census data to obtain estimators of inequality that are robust at disaggregated geographic levels. In this paper, we employ this methodology to produce consistent estimators of inequality for every county in Chile. We find a great deal of variation in inequality, with county-level Gini coefficients ranging from 0.41 to 0.63. [ABSTRACT FROM AUTHOR]

This paper analyzes the evidence of non-linearities in the reaction function of the Central Bank of Chile as it relates to its final objective, inflation, and/or to its intermediate objectives defined by the monetary policy transmission channels. The study uses the flexible approach to non-linear inference proposed by Hamilton (2001), which allows the estimation of non-linear functions by using the data to determine the specific form of the non-linearity to be adopted instead of making any prior assumption of a particular functional form. It is observed that even though the Central Bank's response is linear in relation to the deviations of the inflation rate from its target, there is evidence of non-linearities with respect to the business cycle. Contrary to previous studies, in particular Corbo (2002), the current account gap does not have any predictive role in the reaction function for the period being analyzed. [ABSTRACT FROM AUTHOR]

This paper estimates the residential outage cost in Chile's Central Interconnected System (SIC), using consumer's willingness to pay for energy. We first estimate the cost of reducing energy consumption efficiently, that is only the less valuable kWh (as indicated by the market demand curve) are rationed. Then we estimate the per-kWh cost of rationing by cutting off service. We find that the outage cost varies considerably depending on the length of the rationing period; and on how energy is rationed. Longer restrictions allow users to adjust more, and hence are cheaper. Similarly, we estimate that rationing efficiently is between two and six times cheaper than rationing by cutting off service. [ABSTRACT FROM AUTHOR]