Chile - Mending the roof when the sun is shining
I have Dani Rodrik’s weblog to my list of regularly visited sites and his most recent post provides a super example of how a country can accumulate a fiscal surplus when macroeconomic conditions are favourable giving the government scope for an appropriate and sustainable fiscal stimulus in the face of global economic uncertainty and a downturn in commodity markets.
Notice from the chart above just how dependent is Chile on exports of copper
“Until the current crisis hit, Chile’s economy was booming, fueled in part by high world prices for copper, its leading export. The government’s coffers were flush with cash. (Chile’s main copper company is state-owned, which may be a surprise to those who think Chile runs on a free-market model!) Students demanded more money for education, civil servants higher salaries, and politicians clamored for more spending on all kinds of social programs. Being fully aware of Latin America’s commodity boom-and-bust-cycles and recognizing that high copper prices were temporary, Velasco stood his ground and decided to do what any good macroeconomist would do: smooth intertemporal consumption by saving most of the copper surplus. He ran up the largest fiscal surpluses Chile has seen in modern times.”
blog comments powered by Disqus
Unit 3 Micro: How eBaY boosts World Trade [8 Jun 2013]
Unit 3 Micro: Business Economics Key Term Glossary [2 Jun 2013]
Unit 4 Macro: Brazil Writes Off $900m of African Debt [27 May 2013]
Unit 3 Micro: Businesses Prospering During the Depression [13 May 2013]
A2 Macro: Competitiveness problems in Singapore? Surely not! [5 May 2013]
Unit 4 Macro: Growth and Development Challenges for China [18 Apr 2013]
Unit 4 Macro: Taking the Pulse of Africa - Growth Outlook is Good [16 Apr 2013]
Unit 2 Macro: Revision on Interest Rates [6 Apr 2013]
Unit 2 Macro: The Great Productivity Puzzle [5 Apr 2013]
Revision Quiz: A2 Economics: Trade (1) [4 Apr 2013]
Revision Quiz: A2 Economics: Protectionism (1) [4 Apr 2013]
Unit 4 Macro: Growth and Development in Mongolia [31 Mar 2013]
Unit 4 Macro: Revise and Test - Aid and Micro Finance [31 Mar 2013]
Unit 4 Macro: FDI in Africa [29 Mar 2013]
Unit 2 Macro: Revise and Test - Aggregate Demand [28 Mar 2013]
Unit 2 Macro: Revise and Test - Macro Objectives [27 Mar 2013]
Unit 2 Macro: Revise and Test - National Income [27 Mar 2013]
Unit 2 Macro: Revise and Test - The Circular Flow [27 Mar 2013]
Unit 4 Macro: Trade Costs Higher for Developing Countries [17 Mar 2013]
Unit 4 Macro: Growth and Development in South Korea [13 Mar 2013]
Unit 4 Macro: China’s Presence in Europe [26 Feb 2013]
Unit 2 Macro: Slow Export Growth Hampers UK Recovery [11 Feb 2013]
Unit 4 Macro: Abenomics - Changing Monetary Policy in Japan [10 Feb 2013]
Unit 4 Macro: The UK Economy and the Euro [10 Feb 2013]
Unit 4 Macro: The UK Economy Outside of the Euro Area [4 Feb 2013]
Unit 4 Macro: Global Economic Power Shift Continues [28 Jan 2013]
Unit 4 Macro: Fair Trade and Micro Finance - Spurs to Development? [20 Jan 2013]
econoMAX - Banana Wars are finally over! [19 Jan 2013]
Unit 4 Macro: Overseas Aid and Economic Development - Debt Relief and Debt Cancellation [17 Jan 2013]
Unit 4 Macro: Smarter Ways of Measuring Trade in a Globalised World [16 Jan 2013]
Unit 4 Macro: Overseas Aid and Economic Development - Benefits and Costs [15 Jan 2013]
Unit 4 Macro: Overseas Aid and Economic Development - Basic Background [14 Jan 2013]
Unit 4 Macro: Broader Economic Benefits of Trade [14 Jan 2013]
Teaching Macro: Charts on the US Economy [13 Jan 2013]
Unit 4 Macro: Fair Trade and Development [12 Jan 2013]
Unit 4 Macro: Sources of Comparative Advantage [11 Jan 2013]
Unit 4 Macro: The World Trade Organisation (WTO) [9 Jan 2013]
Unit 4 Macro: GDP and PPP Adjustments [8 Jan 2013]
Unit 4 Macro: Links on International Financial Flows and Development [3 Jan 2013]
Prospects for the UK Economy in 2013 [2 Jan 2013]
Unit 4 Macro: Britain’s Future in the European Union [27 Dec 2012]
Unit 4 Macro: Brazil - economic slowdown continues [26 Dec 2012]
Unit 3 Micro: Top Firms Target the Rich [17 Dec 2012]
Unit 2 Macro: Underemployment in the UK Economy [1 Dec 2012]
Unit 4 Macro: Mo Tanweer - Debunking the Myths of China [27 Nov 2012]
Peter Marsh - A New Industrial Revolution [21 Nov 2012]
Bangladesh: As good as it looks on paper? [18 Nov 2012]
Scoop.It Boards become more popular with Economics teachers [15 Nov 2012]
Unit 4 Macro: UK to End Financial Aid to India from 2015 [12 Nov 2012]
Student Collaboration using Pinterest [9 Nov 2012]
Unit 4 Macro: Revision Prezi on International Trade and Development [4 Nov 2012]
Unit 4 Macro: Changing Patterns of Exports [4 Nov 2012]
Unit 4 Macro: Teaching Trade in a Different Way [4 Nov 2012]
Unit 4 Macro: Micro Finance, Fair Trade and Development [31 Oct 2012]
Unit 2 Macro: Can UK Exporters Boost the Recovery? [24 Oct 2012]
Unit 4 Macro: Wage Inflation and Chinese Competitiveness and Growth [15 Oct 2012]
Unit 4 Macro: Perspectives on Natural Resource Curses [13 Oct 2012]
Unit 4 Macro: The Dutch Disease [9 Oct 2012]
Unit 2 Macro: The UK Economy - What Would Keynes Do? [7 Oct 2012]
Unit 4 Macro: Growth and Development Constraints for India [1 Oct 2012]
Unit 4 Macro: Drivers of Economic Growth in India [29 Sep 2012]
Unit 4 Macro: Financing Trade - Renminbi Rising [26 Sep 2012]
LSE lecture: Policy Challenges for Growth in Africa and South Asia [26 Sep 2012]
The World Trade Organization [24 Sep 2012]
Unit 4 Macro: Chile - Development Growing Pains [21 Sep 2012]
Unit 4 Macro: South Africa must diversify the economy [18 Sep 2012]
Unit 4 Macro: Primary Export Dependence [15 Sep 2012]
Unit 4 Macro: Patterns of Trade [10 Sep 2012]
Unit 2 Macro: New to Macro - Kick-starting the British Economy [6 Sep 2012]
Unit 4 Macro: Recommended Sites for Teachers [24 Aug 2012]
Unit 4 Macro: Social Capital and Economic Development [27 Jul 2012]
Unit 4 Macro: Can Spain Remain Competitive? [17 Jul 2012]
Unit 4 Macro: China’s Green Development Agenda [17 Jul 2012]
Unit 4 Macro: Savings and Investment in China [14 Jul 2012]
Unit 4 Macro: Rapid Wage Inflation in China [13 Jul 2012]
Unit 4 Macro: China and Reinventing Innovation [17 Jun 2012]
Unit 2 Macro: Cyclical and Structural Economic Issues Facing the UK [23 May 2012]
Unit 2 Macro: Evaluation on Supply-Side Policies [21 May 2012]
Unit 2 Macro: The Current Account of the Balance of Payments [20 May 2012]
Unit 2 Macro: UK Trade in Services [20 May 2012]
Unit 2 Macro: The Importance of Productivity [20 May 2012]
Q&A: What do we need to know about output gaps? [20 May 2012]
Revision notes on unemployment [20 May 2012]
Unit 2 Macro: Bank Cuts UK growth Forecast for 2012 [17 May 2012]
Unit 2 Macro: Revision Notes on Supply-side Policies [10 May 2012]
Unit 2 Macro: Model answer for revision data question [9 May 2012]
Made in China - but not quite so cheaply…... [8 May 2012]
F585: Recent Articles of Relevance [6 May 2012]
Unit 2 Macro: Trade and Balance of Payments Glossary [5 May 2012]
Unit 2 Macro: Economic Cycle Glossary [5 May 2012]
Unit 2 Macro: Aggregate Demand Glossary [5 May 2012]
Macro Revision - Key Statistics on the UK Economy [4 May 2012]
Macro Revision: Putting Things in Context [29 Apr 2012]
Unit 2 Macro: Britain back in Recession [29 Apr 2012]
Unit 4 Macro: The Euro Zone Crisis (Revision) [22 Apr 2012]
Unit 2 Macro: Globalisation and the Growth of Ports [11 Apr 2012]
Unit 2 Macro: The UK Balance of Payments in 2011 [4 Apr 2012]
Unit 4 Macro: Floating and Managed Floating Exchange Rates [2 Apr 2012]
Unit 2 Macro: Revision on Capital Investment [30 Mar 2012]
Global Economy- the 2012 BRICS Summit [29 Mar 2012]
AS & A2 Economics Revision / Exam Coaching Workshops Coming Up:
Monday 11 March 2013 - Portsmouth (Vue, Gunwharf Quays)
Wednesday 13 March 2013 - Fulham (Vue, Fulham Broadway)
Thursday 14 March 2013 - Stratford City (Vue, Westfield)
Friday 15 March 2013 - Bristol (Vue, Cribbs Causeway)
Monday 18 March 2013 - Birmingham (Vue, Star City)
Tuesday 19 March 2013 - Manchester (Vue, Salford Quays)
Thursday 21 March 2013 - Newcastle (Odeon, Metro Centre)
Friday 22 March 2013 - Leeds (Vue, The Light)
Monday 22 April 2013 - Stratford City (Vue, Westfield)
Join over 10,000 Economics teachers who receive our regular Economics Teacher Resource Newsletter:
