The Effect of Chile’s Neoliberal Reforms in the 1970s
R
Economics
Research
Policy
My undergraduate honors thesis, which uses the synthetic control method in R to estimate the long-term economic impact of Chile’s structural reforms in the 1970s.
Read the Paper (PDF) | View the R Code (.rmd) | GitHub Repository
Overview
This project investigates the long-term economic impact of Chile’s neoliberal reforms under Augusto Pinochet in the 1970s. The study uses the synthetic control method to estimate how Chile’s GDP per capita would have evolved in the absence of Pinochet’s structural reforms.
The analysis concludes that the reforms had a significant and lasting positive effect on Chile’s economic trajectory. Various robustness checks confirm the credibility of the results.
Methods
The study uses the synthetic control method as proposed by Abadie and Gardeazabal (2003), employing a cross-country panel dataset from the World Bank (1960–2019).
Key packages and tools used:
Synth(R package)- World Bank World Development Indicators
- RMarkdown for code and report integration
Key Findings
- Pinochet’s reforms correspond to a 76% higher GDP per capita in 2019 compared to the synthetic counterfactual.
- The growth effect appears starting in the early 1990s, following Chile’s transition to democracy.
- Robustness checks across donor pools, predictors, and placebo studies support the validity of the findings.