-CANCELLED- The effectiveness of Monetary, Fiscal and Macroprudential Pandemic Policies joint with Juan Francisco Martinez and Dimitrios Tsomcos.

Seminar has been cancelled.

If you would like to participate in this seminar, please send an email to seminar@tinbergen.nl

The Covid-19 health emergency has required an unprecedented deployment of policies in Chile, where fiscal transfers, early withdrawals of pension savings and those that favor credit have been critical. In the latter, the extraordinary provision of state guarantees to commercial loans, provided by the government, in conjunction with the Facility of Credit Conditional to the Growth of Loans (or FCIC, for its acronym in Spanish) stands out. These latest policies have meant that, unlike previous crises, commercial credit has behaved counter-cyclically and has allowed firms to keep operating and with limited levels of delinquency. Using a dynamic stochastic general equilibrium model, we estimate the individual and joint effects of each of these policies. The results suggest that credit policies raised loans by 10%, and GDP by 7% while the joint effect of all the policies raised loans overall by 5% and GDP by 15%. Finally, our results indicate future challenges in financial stability, such as public debt sustainability and medium term economic recovery.