The Precarious Balance of the Structural Balance Rule

Abstract

Besieged by the economic crisis, the structural balance rule is not withstanding well the very shocks it was created for. It is being modified without any discussion of what its optimal level is, or of how to vary it should that become necessary. The establishment of a structural balance rule in 2001 gave Chilean fiscal policy independence from the business cycle and became an instrument that limits the Minister of Finance's discretion in setting the level of public spending. Continue reading...