The Macroeconomic Effects of the Chilean Earthquake 2010

Abstract: The purpose of this paper is to analyze the macroeconomic effects of the earthquake that struck Chile in 2010 and the impact it had on the Chilean economy.  It is a narrative case study of a small, open emerging economy and the timeframe is short term. Like other studies made about macroeconomic effects of a natural disaster, it is surprising to find how fast a country can so rapidly recover from a big devastation like the Chilean earthquake 2010. The final economic impact depends on the structural conditions of the economy and the economic policy mix undertaken to handle the short-term effects. The paper shows that despite the big disaster, Chile showed great resilience to the adverse shook due to its sound finances and effective countercyclical policies.