Responses to commodity shocks only have ‘small’ impact on investment, paper finds
Flexible inflation-targeting frameworks and exchange rates are ‘essential’, but do not ‘majorly’ affect investment
Different monetary and fiscal policy reactions to commodity shocks do not "majorly" affect investment decisions in the commodity sector, a working paper published by the Central Bank of Chile suggests.
In Terms of trade shocks and investment in commodity-exporting economies, Jorge Fornero, Markus Kirchner and Andrés Yany use a dynamic stochastic general equilibrium (DSGE) model to study commodity price changes in Chile and implement "counterfactual policy exercises".
The exercises highlight the
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