The efforts of Andrés Velasco, a Columbia-educated Ph.D economist who is currently the finance minister of Chile, to smooth out the economic impacts of cyclical fluctuations in copper prices are profiled in the WSJ. Because copper has been a key Chilean export, spikes in its price can fatten wallets a lot very quickly. With a wallet full of cash, what do you do?
The quote that sums it up best: "If you get some extra money, you will ask, 'Will I have this again next year?' If not you say, 'Well, I'll save part of it.'" Welcome to the world of the permanent income hypothesis!