Abstract
A range of stabilisation options are considered to enable the Chilean economy to ‘accomodate’ a reduction in world copper prices. These include macroeconomic, wage and trade (devaluation, protection, export subsidies) policies. Using a multisectoral model the paper checks the ability of these option to reach employment and current account targets while quantifying their implications for other macroeconomic and structural variables. Each option is efficient in some degree in meeting one target while violating the other External and internal equilibrium cannot, however, be simultaneously achieved without cuts in both money wages and real absorption. Trade policies in themselves are insufficient.
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