Knowledge Bank

The liberalization and reregulation of the Chilean economy from 1973 through 1983 generates useful lessons on potential pitfalls in the transition from an illiberal to a liberalized economy. This article reviews the measures adopted by Chilean authorities during this period and their macro impact on the economy. Particular attention is devoted to the role of the financial sector in the economic crisis that emerged in the early 1980s. This experience underscores the need for appropriate regulation in an economy ongoing deregulation.