Inflation and Stabilisation in Chile 1970–7

  • Laurence Whitehead
Part of the St Antony’s Series book series


During the 1970s Chilean society has been wracked by a political and ideological conflict of great intensity. In the course of these struggles the rate of inflation, which had long been endemic at annual levels of 20–30 per cent, accelerated to levels unprecedented in the history of the republic (see Table 3.1). It remained above l00 per cent for about five years (briefly running above 500 per cent at the peak), and even with the most draconian-looking programme of stabilisation several years were needed to bring the rate of inflation back into the previously accepted range of tolerance. Comparing the state of the economy at the end of the period with its condition at the beginning, one observes that after all the drastic structural changes — first in a socialist, then in a capitalist, direction — almost no net investment or growth has occurred. The labour force has increased by 18 per cent (see Table 3.9 below), a great deal of skilled human capital has been lost through emigration, unemployment levels that would have been considered a disgrace in the 1950s are now considered a matter for congratulation, and the distribution of income, after a marked shift towards wage earners in the early years, has become more regressive than ever.


Exchange Rate Real Wage Money Supply Current Account Deficit Debt Service 
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© Rosemary Thorp and Laurence Whitehead 1979

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  • Laurence Whitehead

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