TY - BOOK ID - 101239781 TI - To Bet or Not to Bet : Copper Price Uncertainty and Investment in Chile AU - Comelli, Fabio. AU - Perez Ruiz, Esther. PY - 2016 SN - 1475553897 1475553757 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Copper KW - Prices KW - Native element minerals KW - Transition metals KW - Investments: Metals KW - Foreign Exchange KW - Investments: Options KW - Macroeconomics KW - Intertemporal Firm Choice and Growth, Investment, or Financing KW - Investment KW - Capital KW - Intangible Capital KW - Capacity KW - 'Panel Data Models KW - Spatio-temporal Models' KW - Metals and Metal Products KW - Cement KW - Glass KW - Ceramics KW - Price Level KW - Inflation KW - Deflation KW - Pension Funds KW - Non-bank Financial Institutions KW - Financial Instruments KW - Institutional Investors KW - Currency KW - Foreign exchange KW - Finance KW - Investment & securities KW - Metal prices KW - Asset prices KW - Exchange rates KW - Options KW - Financial institutions KW - Commodities KW - Metals KW - Derivative securities KW - Chile KW - Panel Data Models KW - Spatio-temporal Models UR - https://www.unicat.be/uniCat?func=search&query=sysid:101239781 AB - 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 1½ and 2 years for investment to return to its trend level. Empirical ranges depend on alternative definitions for investment, uncertainty, and options’ maturing time. ER -