02118cas a2200253 a 4500 AALejournalIMF005703 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451872354 1018-5941 BD-DhAAL BD-DhAAL Kumhof, Michael. Chile's Structural Fiscal Surplus Rule : A Model-Based Evaluation / Michael Kumhof, Douglas Laxton. Washington, D.C. : International Monetary Fund, 2009. 1 online resource (54 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students The paper analyzes Chile's structural balance fiscal rule in the face of copper price shocks originating in foreign copper demand. It uses a version of the IMF's Global Integrated Monetary and Fiscal Model (GIMF) that includes a copper sector. Two results are obtained. First, Chile's current fiscal rule performs well if the policymaker puts a small weight on output volatility (relative to inflation volatility) in his/her objective function. A more aggressive countercyclical fiscal rule can attain lower output volatility, but there is a trade-off with (somewhat) higher inflation volatility and (much) higher volatility of fiscal variables. Second, given its current stock of government assets, Chile's adoption of a 0.5% surplus target starting in 2008 is desirable from a business cycle perspective. This is because the earlier 1% target would have required significant further asset accumulation that could only have been accomplished at the expense of greater volatility in fiscal instruments and therefore in GDP. Mode of access: Internet Laxton, Douglas. IMF Working Papers; Working Paper ; No. 2009/088 Full text available on IMF http://elibrary.imf.org/view/journals/001/2009/088/001.2009.issue-088-en.xml IMF e-Library