 I would like to join the appreciation for being invited to this project and having the opportunity to participate with the colleagues here, particularly with Tony and Alan in this very interesting project. Well, the case of Chile is, I think, interesting in terms of some lessons that can be derived from a country that is still dependent on copper as a main source of foreign exchange and export, but Chile is already at $25,000 per capita country economy. It's a member of the OECD, so it's a fairly upper middle income stage of development, but its economic structure still dependent on natural resources. Copper is the most important source of foreign exchange, of fiscal revenues for the government, and the macroeconomic performance of the economy has been traditionally tied to the evolution of international prices of copper. What makes the Chilean case interesting is that in the last 20 to 30 years, it has developed institutions, both commodity stabilization funds, then sovereign wealth funds, and a macroeconomic framework oriented to isolate the macroeconomy from external disturbances and changes in the demand for copper and the price of copper. So I will discuss briefly the content of these institutions and then make a brief evaluation of the results so far. Well, let me give you some background. Here there is a graph that shows the copper prices, cycles, and the cycles in growth and investment. Though there is not a completely tight association between copper prices and economic activity, still the correlation is important. You see ups and downs in the three variables, and in general, when there has been a decline in the price of copper, there has been either a slowdown in growth or full recessions. And then recoveries in general have also coincided with an upward trend in copper prices and copper demand. Here I would like to highlight the main depressions and recessions that the Chilean economy experienced in the last 40 years or so, and showing that the intensity of these slowdowns or recessions has diminished quite substantially over time, and it's important to underscore the contribution of a copper stabilization fund, a wealth sovereign fund, and an overall macro framework to reduce the intensity and the severity of these external shocks and make recessions and cycles much more than... Well, Chile experienced two big recessions in the mid-70s and the early 80s. There was a big recession in 1975 coinciding with a decline in the price of copper, and also the adoption of shock treatment macroeconomic policies. This was at the start of the Pinochet regime. There was also an economic crisis before during the agenda period in 72-73, but the Pinochet regime, when we used to have the monetarist or neoliberal economic team, chose shock treatment in 72, and that coincided also with a decline in the price of copper. GDP declined by around 12 percent, investment fell 25 percent, and unemployment increased to near 20 percent. Then after a period of rapid liberalization of the financial market, coming also with an exchange rate-based stabilization in the late 70s, early 80s, this experiment ended up in another recession in this time accompanied with a financial crisis, in which GDP fell by 16 percent, investment collapsed 35 percent, and unemployment increased to 25 percent. Those years, the mid-70s and mid-80s were rough years for the Chilean economy. Well, then I will mention that in 1987, the government created a copper stabilization fund, and that was important to shift the macroeconomy and make it more resilient to external shocks. The two main recessions of the last 20 years were in 1999, when GDP declined by just 1.2 percent. This coincided more or less with the aftermath of the East Asian crisis, the Russian crisis, the Mexican crisis in the mid-1990s, and then we had another recession, but milder again, in 2009, at the time of the global financial crisis. So it's very clear that in the mid-70s and early 80s, we had very strong downturns or crisis. The situation improved quite substantially in the two decades following it. Well, what were the main institutional innovations to help improve macroeconomic management in an economy that was still and is still dependent on copper prices and natural resources? Well, as I mentioned, the creation of the copper stabilization fund that accumulated resources when the price of copper was above a certain reference level and helped to run down and use those accumulated savings at the time in which copper prices were below the reference price was an important improvement because it helped the government to have a more stable profile of revenues and therefore avoiding the necessity to cut down expenditure at the times of an adverse shock, which tend to amplify the macroeconomic impact of external disturbances. Then in 2016, the government put forward, and this was approved by parliament, a fiscal responsibility law which basically created a sort of second-generation stabilization fund called this time Sovereign Wealth Fund, one the economic and social fund, and the other the pension stabilization reserve fund. So that was an important set of institutional innovation oriented to isolate the domestic macroeconomy from the effect of external changes in the price of copper and the demand for copper and the price of other commodities. Well, but this was not done in isolation of overall macroeconomic policy. That is very important because you can create an stabilization fund which, but if macroeconomic policies are not consistent with this fund, their effect will be not of much help. And here I would like to highlight three or four pieces of this framework that has been evolving over time that has helped to keep stable macro conditions and this has helped also to underpin rapid growth over the last two, three decades. First Chile adopted in the early 1990s inflation targeting. Exchange rate policies have changed from target zones in the 1990s to a fully flexible exchange rate regime since the year 2000. Then in the area of fiscal policy, the government put in place a fiscal rule which basically says that permanent expenditure has to be geared to permanent incomes, revenues, and to keep parameters are behind that potential output and the long-term price of copper. And then the international research policy of central bank. Well, they're passing me some papers that I should come to a close so we'll jump to conclusions. There's a lot to talk about this, but let me be very telegraphic in terms of what have been the results of these policies. Achievements on the achievement side. I think it's very clear that they have contributed that this is developed more formally and with empirical backing in the chapter of the book that has been a reduction. I have already mentioned this in the severity of recession following adverse external shocks. If you compare the size of the recessions and the ability to recover the 70s and 80s with the 1990s and the 2000 and the 2010, the situation has improved much more. And I think this fund that were created and the overall macro framework helped to that. The second is that Chile has not suffered any serious financial crisis in the last 30 years. It suffered a very serious crisis in 1982 and 83, but this is already something of the past. And I think these frameworks and these institutions have contributed to this result. The other is that it's not put as a bullet point here, but I think it's important to mention it, is that in 2009, in line with the recommendations of the IMF, Chile was able, developing countries, was able to adopt counter-cyclical fiscal policies and spend $9 billion in a fiscal expansion in 2009 to compensate for a fall in aggregate demand coming from the external sector. And that was possible because the government had savings, important savings, and these savings were enabled by this fund. So I think that was something important. What are the challenges? Well, here I would like to highlight very quickly four. One is that though these funds have more or less explicit triggering criteria for accumulating assets in good times, they are virtually silent and they don't have a clear indication of how, when and how resources will be spent in bad times. So the rule is more biased. There is a bias for accumulation or savings bias rather than a dissaving mechanism. And so it is entirely on the discretion of the finance minister to decide when to spend part of these resources if he or she is facing a complicated macroeconomic situation. That's one point. The other is that are those funds accumulating too much resources? Is the government perhaps too risk-averse? Well, this is an empirical question. The two sovereign wealth funds that were created in 2016 have now more or less $30 billion accumulated, which is roughly 10% of Chilean GDP. If you add the level of international reserves at the central bank, you have another $30 billion, so $60 billion is 20% of GDP in terms of insurance in some form or the other, either international reserves or surpluses in the funds. Is this high, low, intermediate? Is the right amount? Is optimal? It's an open question. Finally, the fiscal rule, though it's very neat conceptually, is not free of problems when it comes to actual implementation because predicting copper prices is not an easy game, particularly medium to long-run prices of commodities. They have very strong features of a random walk. And the other is how to reduce external exchange rate volatility in a system of flexible exchange rate, like the one that Chile has.