Description

This paper documents the empirical regularities characterizing business cycles in Chile in a wide range of economic activities. While the country presents many of the typical features of business fluctuations in OECD countries, Chilean cycles present some striking peculiarities. Trade represents an important part of economic activity as exports move contemporaneously with output and the terms of trade lead the cycle long in advance. Besides, public policies play a significant role in short-run economic fluctuations: government expenditures and monetary policy variables lead the cycle 2 to 3 quarters in advance. Kydland and Prescott's (1990) ``monetary myth'' is alive in Chile.