Numerous scholars have analyzed the historical behavior of inflation in Chile, and have concluded that fiscal largesse, low
Central Bank credibility, and widespread indexation practices (both for wages and the
nominal exchange rate) were behind Chile’s historical high rates of inflation. In the
1990’s, however, there were important changes in Chile’s monetary policy: the Central
bank was granted independence and it formally adopted an inflation targeting approach
(Corbo 1998, Schmidt-Hebbel and Tapia (2002), and Morandé (2002)). Since then
inflation has declined significantly. During the last few years it has not been significantly
different from world inflation