To Bet or Not to Bet : Copper Price Uncertainty and Investment in Chile /
A strand of research documents Chile's copper dependence hence significant exposure to terms of trade shocks. Copper prices' sharp decline and forecast uncertainty since the end of the commodity super-cycle has rekindled the debate on Chile's adjustment capacity to external shocks. Fo...
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| Formato: | Revista |
| Idioma: | English |
| Publicado: |
Washington, D.C. :
International Monetary Fund,
2016.
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| Series: | IMF Working Papers; Working Paper ;
No. 2016/218 |
| Acceso en liña: | Full text available on IMF |
| Summary: | A strand of research documents Chile's copper dependence hence significant exposure to terms of trade shocks. Copper prices' sharp decline and forecast uncertainty since the end of the commodity super-cycle has rekindled the debate on Chile's adjustment capacity to external shocks. Following Malz (2014), this paper builds a time-varying measure of copper price uncertainty using options contracts. VAR analysis shows that the investment response to an uncertainty shock of average magnitude in the sample is strong and persistent: the cumulative fall in investment from trend at a one-year horizon ranges 2-5.8 percentage points; and it takes between 1 1\2 and 2 years for investment to return to its trend level. Empirical ranges depend on alternative definitions for investment, uncertainty, and options' maturing time. |
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| descrición da copia: | <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required |
| Descrición Física: | 1 online resource (23 pages) |
| Formato: | Mode of access: Internet |
| ISSN: | 1018-5941 |
| Acceso: | Electronic access restricted to authorized BRAC University faculty, staff and students |