Excessive Optimism

The uncertain international environment may sour the optimistic expectations we are experiencing in the bicentennial of the Chilean economy

Abstract

According to Nobel laureate in economics Paul Krugman, this is the dismal science. The task of macroeconomists is to lay out for the country its real options for economic growth, whether they are welcome or not. We would all be glad if the Chilean economy recovered quickly and sustained a healthy, robust, and steady rate of growth. Nevertheless, we face severe challenges in the international environment that may cool the positive—and perhaps overheated—expectations for this year and the next. The problem with unrealistic or overblown expectations is that the decisions taken on the basis of them will necessarily be wrong, and the situation may therefore deteriorate even further. Continue reading...