The Macroeconomic Effects of the Chilean Earthquake 2010

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