Exchange Rate Determination in Natural Resources-Rich Economies
Keywords:
real exchange rate, natural resources, devaluation, trade balance, resource management, resource-rich economyAbstract
This paper deals with the role of natural resources in the process of determination of the real exchange rate within the context of a resource-based sector that is important within the economy and heavily integrated with other sectors. In so doing, the article tries to shed some light on questions like: How does the effectiveness of nominal devaluation in promoting real devaluation in a resource-rich economy compare with that in resource-poor economies? What are the implications for the responsiveness of trade flows to devaluation of explicitly considering a natural resource-based sector? Is devaluation more likely to be contractionary in a resource-rich economy rather than in a economy that does not depend on natural resources? How do changes in resource management policies (i.e., extraction taxes) affect the real exchange rate, trade balance and real income in the short run and long run? How have these results been affected by whether the resource is exploited under private property or under common property?Downloads
References
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Copyright (c) 1989 Ramón López
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
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