The effects of internal and external shocks on a small open economy: the case of Chile.

Summary Globalization is probably the main characteristic of the world economy of the 21st century. It is reflected in particular in the integration through trade, financial and commodity markets. While such a context affects all types of economies in a very significant way, it should be emphasized that small open economies dependent on commodity exports, and open to global financial markets, are generally the most exposed. The Chilean economy has all these characteristics. It is in this context that this thesis explores the effectiveness of Chilean fiscal policy and the effects of commodity prices and international financial shocks on Chilean GDP and other important macroeconomic variables. To this end, an empirical approach based on vector autoregressive models is used.