Is Exchange Rate Stabilization An Appropriate Cure For The Dutch Disease
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Is Exchange Rate Stabilization An Appropriate Cure For The Dutch Disease
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Author : Mr.Ruy Lama
language : en
Publisher: International Monetary Fund
Release Date : 2010-08-01
Is Exchange Rate Stabilization An Appropriate Cure For The Dutch Disease written by Mr.Ruy Lama and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010-08-01 with Business & Economics categories.
This paper evaluates how successful is a policy of exchange rate stabilization to counteract the negative effects of a Dutch Disease episode. We consider a small open economy model that incorporates nominal rigidities and a learning-by-doing externality in the tradable sector. The paper shows that leaning against an appreciated exchange rate can prevent an inefficient loss of tradable output but at the cost of generating a misallocation of resources in other sectors of the economy. The paper also finds that welfare is a decreasing function of exchange rate intervention. These results suggest that stabilizing the nominal exchange rate in response to a Dutch Disease episode is highly distortionary.
Is Exchange Rate Stabilization An Appropriate Cure For The Dutch Disease
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Author : Ruy Lama
language : en
Publisher:
Release Date : 2014
Is Exchange Rate Stabilization An Appropriate Cure For The Dutch Disease written by Ruy Lama and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with categories.
This paper evaluates how successful is a policy of exchange rate stabilization to counteract the negative effects of a Dutch Disease episode. We consider a small open economy model that incorporates nominal rigidities and a learning-by-doing externality in the tradable sector. The paper shows that leaning against an appreciated exchange rate can prevent an inefficient loss of tradable output but at the cost of generating a misallocation of resources in other sectors of the economy. The paper also finds that welfare is a decreasing function of exchange rate intervention. These results suggest that stabilizing the nominal exchange rate in response to a Dutch Disease episode is highly distortionary.
Is Exchange Rate Stabilization A L4510n Appropriate Cure For The Dutch Disease
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Author : Juan Pablo Medina Guzman
language : en
Publisher: International Monetary Fund
Release Date : 2010-08-01
Is Exchange Rate Stabilization A L4510n Appropriate Cure For The Dutch Disease written by Juan Pablo Medina Guzman and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010-08-01 with Business & Economics categories.
This paper evaluates how successful is a policy of exchange rate stabilization to counteract the negative effects of a Dutch Disease episode. We consider a small open economy model that incorporates nominal rigidities and a learning-by-doing externality in the tradable sector. The paper shows that leaning against an appreciated exchange rate can prevent an inefficient loss of tradable output but at the cost of generating a misallocation of resources in other sectors of the economy. The paper also finds that welfare is a decreasing function of exchange rate intervention. These results suggest that stabilizing the nominal exchange rate in response to a Dutch Disease episode is highly distortionary.
Is Exchange Rate Stabilization An Appropriate Cure For The Dutch Disease
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Author : Ruy Lama C.
language : en
Publisher:
Release Date : 2010
Is Exchange Rate Stabilization An Appropriate Cure For The Dutch Disease written by Ruy Lama C. and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010 with categories.
When And Why Worry About Real Exchange Rate Appreciation The Missing Link Between Dutch Disease And Growth
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Author : International Monetary Fund
language : en
Publisher: International Monetary Fund
Release Date : 2010-12-01
When And Why Worry About Real Exchange Rate Appreciation The Missing Link Between Dutch Disease And Growth written by International Monetary Fund and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010-12-01 with Business & Economics categories.
We review the literature on Dutch disease, and document that shocks that trigger foreign exchange inflows (such as natural resource booms, surges in foreign aid, remittances, or capital inflows) appreciate the real exchange rate, generate factor reallocation, and reduce manufacturing output and net exports. We also observe that real exchange rate misalignment due to overvaluation and higher volatility of the real exchange rate lower growth. Regarding the effect of undervaluation of the exchange rate on economic growth, the evidence is mixed and inconclusive. However, there is no evidence in the literature that Dutch disease reduces overall economic growth. Policy responses should aim at adequately managing the boom and the risks associated with it.
Booming Sector And Dutch Disease Economics
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Author : Warner Max Corden
language : en
Publisher:
Release Date : 1982
Booming Sector And Dutch Disease Economics written by Warner Max Corden and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1982 with Business cycles categories.
Foreign Exchange Intervention And The Dutch Disease
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Author : Julia Faltermeier
language : en
Publisher: International Monetary Fund
Release Date : 2017-03-27
Foreign Exchange Intervention And The Dutch Disease written by Julia Faltermeier and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-03-27 with Business & Economics categories.
We study the optimal foreign exchange (FX) intervention policy in response to a positive terms of trade shock and associated Dutch disease episode in a small open economy model. We find that during a Dutch disease episode tradable production drops below the socially optimal level, resulting in lower welfare under learningby- doing (LBD) externalities. FX reserves accumulation improves welfare by preventing a large appreciation of the real exchange rate and by inducing an efficient reallocation between the tradable and non-tradable sectors. For an empirically plausible parametrization of LBD externalities, the model predicts that in response to a 10 percent increase in commodity prices FX reserves should increase by 1.5 percent of GDP. We also find that the welfare gains from optimally using FX reserves are twice as high as the gains from relying only on monetary policy. These results suggest that FX intervention is a beneficial policy to counteract the loss of competitiveness during a Dutch disease episode.
Unintended Consequences Of U S Monetary Policy Shocks Dutch Disease And Capital Flow Measures In Emerging Markets And Developing Economies
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Author : Juan Yepez
language : en
Publisher: International Monetary Fund
Release Date : 2021-08-06
Unintended Consequences Of U S Monetary Policy Shocks Dutch Disease And Capital Flow Measures In Emerging Markets And Developing Economies written by Juan Yepez and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021-08-06 with Business & Economics categories.
Dutch disease is often referred as a situation in which large and sustained foreign currency inflows lead to a contraction of the tradable sector by giving rise to a real appreciation of the home currency. This paper documents that this syndrome has been witnessed by many emerging markets and developing economies (EMDEs) as a result of surges in capital inflows driven by accommodative U. S. monetary policy. In a sample of 25 EMDEs from 2000-17, U. S. monetary policy shocks coincided with episodes of currency appreciation and a contraction in tradable output in these economies. The paper also shows empirically that the use of capital flow measures (CFMs) has been a common policy response in several EMDEs to U.S. monetary policy shocks. Against this background, the paper presents a two sector small open economy augmented with a learning-by-doing (LBD) mechanism in the tradable sector to rationalize these empirical findings. A welfare analysis provides a rationale for the use of CFMs as a second-best policy when agents do not internalize the LBD externality of costly resource misallocation as a result of greater capital inflows. However, the adequate calibration of CFMs and the quantification of the LBD externality represent important implementation challenges.
Managing Economic Volatility In Latin America
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Author : Mr.R. Gelos
language : en
Publisher: International Monetary Fund
Release Date : 2014-03-27
Managing Economic Volatility In Latin America written by Mr.R. Gelos and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-03-27 with Business & Economics categories.
How has Latin America coped with external shocks and economic vulnerabilities in the aftermath of the global financial crisis? Managing Economic Volatility in Latin America looks at how the region has fared in recent years in an environment of uncertainty. It presents a collection of novel contributions on capital flows, terms of trade, and macroeconomic policy in Latin America. The rigorous expert analysis offers an up-to-date guide to many of the key economic policy questions in the region. Chapters focus on important analytical issues, including assessing reserves adequacy and current account levels. The roles of macroeconomic policies and exchange rates regimes in coping with large capital inflows are examined, as well as the effectiveness of both monetary policy and fiscal policy in dealing with economic challenges in the region.
Imf Research Bulletin June 2011
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Author : International Monetary Fund. Research Dept.
language : en
Publisher: International Monetary Fund
Release Date : 2011-06-07
Imf Research Bulletin June 2011 written by International Monetary Fund. Research Dept. and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011-06-07 with Business & Economics categories.
June 2011: The Q&A in this issue features seven questions on the global trade collapse of 2008-09 (by Rudolfs Bems); the research summaries are "The Impact of the Great Recession on Emerging Markets" (by Ricardo Llaudes, Ferhan Salman, and Mali Chivakul) and "The Missing Link between Dutch Disease, Appreciation, and Growth (by Nicolás E. Magud and Sebastián Sosa). The issue also lists the contents of the June 2011 issue of the IMF Economic Review, Volume 59 Number 2; visiting scholars at the IMF during April-June 2011; and recent IMF Working Papers and Staff Discussion Notes.