Evolution and Use of Structural Models in the Central Bank of Chile

Abstract

The Central Bank of Chile (BCC) uses various models to analyze the Chilean economy and to assist board members in their decision-making. Its main structural model is called XMAS and it is a Neo Keynesian dynamic and stochastic general equilibrium model with a wide variety of sectors, rigidities, and shocks. This model is usually used as part of the monetary policy framework. As the economy is continually evolving, the need for new tools to answer new questions is evolving as well. Thus, to answer new questions, the BCC follows a strategy of incorporating into the XMAS only the necessary changes and creating new models, called satellites, for other issues. This document shows the main features of the XMAS and shows examples of changes made to this model in the past, as well as satellite models.

JEL classification: E12 ; E32 ; E52 ; E58