Copper and the Chilean Economy, 1960-98

Information about Western Hemisphere Hemisferio Occidental

Journal Issue

Volume/Issue:: 1999/57
Series:: IMF Working Papers
Author(s):: Antonio Spilimbergo
Publisher:: INTERNATIONAL MONETARY FUND
Published Date:: April 1999
DOI:: http://dx.doi.org/10.5089/9781451847758.001
ISBN:: 9781451847758
ISSN:: 1018-5941
Page:: 33

The paper concludes that world copper prices play an important role in short-term fluctuations and probably influence long-term growth of the Chilean economy. While many mechanisms may be at work, investment seems to play a major role. In a copper price boom, the higher copper price and associated capital inflows create upward pressure on the real exchange rate. The appreciation of the Chilean peso during the first part of the copper cycle contributes to lower inflation, which could partly explain why real wages grow more rapidly in this part of the cycle.

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Copper and the Chilean Economy, 1960-98