After marked fluctuations in the business cycle over the last fifty years, the Chilean economy now appears to be less volatile and more resilient to external shocks. Because Chile is a small and increasingly open economy, analysts have long suspected that the amplitude of the cyclical fluctuations in the business cycle is closely related to changes in external conditions. However, many open questions remain in this regard. To what extent are the pronounced output fluctuations associated with ups and downs in external conditions, and to what extent can they be attributed to domestic sources? Are real or financial external shocks the most important source of fluctuations? Has the increasing international integration implied greater synchronization of the domestic cycle with external economic conditions? If so, does this imply greater external vulnerability, or has resilience to external shocks improved somewhat?