Testing the Hypothesis of Dutch Disease in the Bolivian Economy

2014 ◽  
pp. 93-116
Author(s):  
Sergio Cerezo Aguirre
Keyword(s):  
Exchange Rate ◽  
Natural Resources ◽  
Real Exchange Rate ◽  
Foreign Currency ◽  
Manufacturing Sector ◽  
Dutch Disease ◽  
Real Wages ◽  
Sharp Rise ◽  
The Real ◽  
Services Sector

In recent years, Bolivia has experienced a strong inflow of foreign currency due in part to a sharp rise in prices of natural resources exports. This element along with the real exchange rate appreciation has created concern about whether the economy is experiencing the so-called Dutch Disease (DD). Based on conditions described in Oomes and Kalcheva (2007) to detect this economic phenomenon (real appreciation, slower manufacturing sector growth, prompt growth of services and higher wages), this document finds no empirical evidence on this phenomenon. In particular, neither an overvalued exchange rate nor a persistent misalignment of the real exchange rate, nor a manufacturing de-industrialization is observed. The evolution of the services sector, their prices and real wages do not respond to the dynamics of a sector boom. However, the document considers that the presence of this phenomenon deserves close scrutiny.

scholarly journals Boom Goes the Price: Giant Resource Discoveries and Real Exchange Rate Appreciation

2020 ◽  
Vol 130 (630) ◽  
pp. 1715-1728 ◽  
Author(s):  
Torfinn Harding ◽  
Radoslaw Stefanski ◽  
Gerhard Toews
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Real Exchange Rate ◽  
Direct Evidence ◽  
Oil And Gas ◽  
Real Exchange Rates ◽  
Labour Productivity ◽  
Dutch Disease ◽  
The Real ◽  
Traded Goods

Abstract We estimate the effect of giant oil and gas discoveries on bilateral real exchange rates. A giant discovery with the value of 10% of a country’s GDP appreciates the real exchange rate by 1.5% within ten years following the discovery. The appreciation starts before production begins and the non-traded component of the real exchange rate drives the appreciation. Labour reallocates from the traded goods sector to the non-traded goods sector, leading to changes in labour productivity. These findings provide direct evidence on the channels central to the theories of the Dutch disease and the Balassa–Samuelson effect.

scholarly journals Aid and the real exchange rate: Dutch disease effects in African countries

1998 ◽  
Vol 33 (4) ◽  
pp. 177-185 ◽  
Author(s):  
Isabell Adenauer ◽  
Laurence Vagassky
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Dutch Disease ◽  
African Countries ◽  
The Real

scholarly journals Do emigrants’ remittances cause Dutch disease? A developing countries case study

2019 ◽  
Vol 30 (1) ◽  
pp. 59-76
Author(s):  
Burçak Polat ◽  
Antonio Rodríguez Andrés
Keyword(s):  
Developing Countries ◽  
Exchange Rate ◽  
Exchange Rates ◽  
Real Exchange Rate ◽  
Real Exchange Rates ◽  
Development Aid ◽  
Dutch Disease ◽  
The Real ◽  
Trade Competitiveness ◽  
Remittance Flows

Although the positive socio-economic effects of remittances for recipient countries in the short term are unmistakable, inflows of remittances may at the same time exert adverse effects on the trade competitiveness of an economy, by appreciating the real exchange rate. This phenomenon is characterised as an instance of the ‘Dutch disease’ – the negative impact of windfall revenue inflows on the competitiveness of other tradable sectors and hence on overall economic growth. While the real effect of workers’ remittances on real exchange rates in a recipient economy is still a controversial issue, several studies have analysed evidence for the existence of the ‘Dutch disease’ phenomenon in various sets of countries. The main objective of this study is to examine whether remittance flows have had any adverse effect on the international trade competitiveness of a selected group of developing countries during the period from 1995 to 2014. Using a one-step system Generalised Method of Moments specification within a simultaneous equation approach, it shows that remittance flows depreciate the real exchange rate at their levels and that the lagged value of remittances create the Dutch disease for this country group. In addition, we confirm that while trade openness and world real interest rates contribute to a depreciation in real exchange rates, gross domestic product per capita and net Official Development Aid inflows tend to appreciate real exchange rates. A policy implication is that trade liberalisation policies that lower tariff rates on capital imports and new export-oriented incentive programmes should be accompanied by measures designed to prevent appreciation in the real exchange rate: steps in this direction such as recent macroeconomic and prudential capital flow management initiatives are briefly referenced. JEL Codes: F20, F21, F22, F23

scholarly journals Abundance of the natural resources as a factor, which destimulates economic growth. Looking for the Dutch disease in Russia

2010 ◽  
Vol 1 (1) ◽  
pp. 43-64
Author(s):  
Kornelia Gierczyńska
Keyword(s):  
Exchange Rate ◽  
Natural Resources ◽  
Real Exchange Rate ◽  
Oil And Gas ◽  
Commodity Prices ◽  
Dutch Disease ◽  
Sustainable Growth ◽  
Oil Price ◽  
Economic Data

In general thinking, countries possessing rich natural resource deposits are blessed, as resource abundance has seemingly positive correlation with the wealth and economic development of a nation. However, experience shows that countries endowed with extreme amounts of natural resources have found themselves in a serious misuse and on a damaging growth path. Extraordinary resource possession is rather an opportunity than a guarantee for better economic performance. The term “Dutch disease” refers to a situation in which new discoveries of natural resources or sharp rises in commodity prices lead to an increase in the equilibrium real exchange rate, thus undermining the competitiveness of the other tradable sectors in the economy. As suggested in the academic literature the Dutch disease is associated ith four main symptoms: a slowdown in manufacturing output, a booming non-tradable sector, an increase in real wages and real exchange rate appreciation. Russia’s oil price dependence and the risk of the Dutch disease are often considered as the main long-term challenges to sustainable growth in the country. In this regard, it is worth studying the available economic data for evidence of these phenomena. Russia’s oil price dependence and the risk of the Dutch disease are often considered as the main long-term challenges to sustainable growth in the country. In this regard, it is worth studying the available economic data for evidence of these phenomena. The main section examines whether in Russia: exports have become more biased towards oil and gas, GDP growth has become more sensitive to oil price fluctuations, the economy is showing symptoms of the Dutch disease.

scholarly journals The Impact Of Exchange Rate Pass-Through On Serbian Export Competitiveness

2014 ◽  
Vol 52 (2) ◽  
pp. 197-214
Author(s):  
Ivan Marković ◽  
Milan Marković
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Foreign Currency ◽  
Nominal Exchange Rate ◽  
National Currency ◽  
The Real ◽  
Positive Effects ◽  
Pass Through ◽  
Exchange Rate Pass Through ◽  
The Impact

Abstract The permanent existence of inflation in Serbia adversely affects achievement of macroeconomic stability. Its effects are reflected in a decrease in the real exchange rate, low price competitiveness of exports and deterioration in the balance of payments. The real exchange rate is an instrument which shows that in conditions of faster growth rate in a country than abroad, the domestic economy can't be competitive in the international market. Implementation of appropriate exchange rate regime inevitably leads to problems of exchange rate changes on import prices and inflation. The research aims to demonstrate the interdependence of inflation and depreciation, and the fact that the general price level increase is a main factor that hinders the realization of the positive effects of the national currency depreciation. Unstable monetary situation in the country undermines the goal of stimulating exports through an increase in the nominal exchange rate and by reducing export prices in foreign currency. Export becomes uncompetitive, while the depreciation of the national currency is quickly spread to inflation through the exchange rate pass-through.

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