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The Dynamic Effects of Chilean Copper Exports and Chinese Market Disturbances

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  • Pardo Piñashca, Eduardo

Abstract

This research computes the variance decomposition of Chilean copper exports from 2009 to 2019. In order to evaluate fluctuations of Chilean copper exports, we introduce the Secondary Industry of China labeled as the Chinese market (that briefly involves electricity, construction, manufacturing, and mining sectors) along with other macroeconomic variables commonly used among the literature to comprehend commodity markets. Thus following Blanchard & Quah (1985) methodology we use long-run restrictions for the SVAR model. These restrictions focus on describing small open economies such as Chile. Through the variance decomposition, we found out that Chinese market disturbances have a strong linkage describing fluctuations of Chilean copper exports over the studied period. What’s more, this contribution is even greater than the international copper price and real exchange rate mainly in the long-run. Therefore, this study finds statistical proof of how relevant is the Chinese market to explain the fluctuations of Chilean copper exports even after the 2000’s commodity super cycle.

Suggested Citation

  • Pardo Piñashca, Eduardo, 2020. "The Dynamic Effects of Chilean Copper Exports and Chinese Market Disturbances," MPRA Paper 103878, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:103878
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    References listed on IDEAS

    as
    1. Blanchard, Olivier Jean & Quah, Danny, 1989. "The Dynamic Effects of Aggregate Demand and Supply Disturbances," American Economic Review, American Economic Association, vol. 79(4), pages 655-673, September.
    2. Felipe G. Morandé & Matías Tapia, 2002. "Exchange Rate Policy in Chile: From the Band to Floating and Beyond," Working Papers Central Bank of Chile 152, Central Bank of Chile.
    3. Marilyne Huchet-Bourdon & Jane Korinek, 2012. "Trade Effects of Exchange Rates and their Volatility: Chile and New Zealand," OECD Trade Policy Papers 136, OECD Publishing.
    4. Sebastián Claro & Claudio Soto, 2013. "Exchange rate policy and exchange rate interventions: the Chilean experience," BIS Papers chapters, in: Bank for International Settlements (ed.), Sovereign risk: a world without risk-free assets?, volume 73, pages 81-93, Bank for International Settlements.
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    More about this item

    Keywords

    Copper exports; Chile; China; SVAR;
    All these keywords.

    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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