ABSTRACT
This chapter provides a brief history of the role of copper in the Chilean development, and discusses the effect of copper price on the Chilean economy. It describes the industrial organization of the copper mining sector, and the role of the state in the sector as well as the importance of the sector for public finances. It presents Robert Deacon's (1993) model. The chapter describes the data used for estimation and calibration of the key parameters of the model. It explains the tax scenarios to be analyzed, taking into account the characteristics of the Chilean tax system. The chapter displays the simulation of the different scenarios and a sensibility analysis. It illustrates the relationship of the GDP cycle and copper cycle. The mining sector has played an important role in the Chilean economic history. The former group obtains revenues from profits; the latter receives rents through taxation.
