Commodity prices have experienced significant swings over the past two decades. Real commodity prices have on average more than doubled in the last decade compared to the previous one while the prices of some commodities such as copper and other industrial metals have more than tripled in real terms. Commodity-exporting economies such as Chile have therefore enjoyed very favorable terms of trade (ToT) by historical standards (figure 1) for Chile the only main exception is the golden period of saltpeter mineral extraction from 1895 to 1930. Hence it is not surprising that many policy discussions in commodity-exporting economies have focused on the effects of commodity price fluctuations on output inflation real exchange rates the current account and other macroeconomic variables as well as on appropriate policy frameworks to deal with commodity price volatility.