{"title":"Commodity currency reactions and the Dutch disease: the role of capital controls.","authors":"Kai Chen, Dongwon Lee","doi":"10.1007/s00181-023-02423-9","DOIUrl":null,"url":null,"abstract":"<p><p>Commodity booms generally induce real exchange rate appreciation in commodity-rich economies and make other tradable sectors less competitive. This \"Dutch disease\" phenomenon has been blamed for leading to structures of production with low diversification and undermining sustainable growth. In this paper, we explore whether capital controls can mitigate the transmission of commodity price changes to the real exchange rate and shield manufactured exports. Examining a panel of 37 commodity-abundant countries over the period 1980-2020, we find that a steeper commodity currency appreciation indeed has a more detrimental impact on manufactured exports. Restrictions on capital flows tend to reduce real appreciation pressures and the severity of the Dutch disease. Countercyclical capital controls seem to help foster economic diversification in commodity-dependent developing countries.</p><p><strong>Supplementary information: </strong>The online version contains supplementary material available at 10.1007/s00181-023-02423-9.</p>","PeriodicalId":11642,"journal":{"name":"Empirical Economics","volume":" ","pages":"1-25"},"PeriodicalIF":1.9000,"publicationDate":"2023-05-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10221746/pdf/","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Empirical Economics","FirstCategoryId":"96","ListUrlMain":"https://doi.org/10.1007/s00181-023-02423-9","RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
Commodity booms generally induce real exchange rate appreciation in commodity-rich economies and make other tradable sectors less competitive. This "Dutch disease" phenomenon has been blamed for leading to structures of production with low diversification and undermining sustainable growth. In this paper, we explore whether capital controls can mitigate the transmission of commodity price changes to the real exchange rate and shield manufactured exports. Examining a panel of 37 commodity-abundant countries over the period 1980-2020, we find that a steeper commodity currency appreciation indeed has a more detrimental impact on manufactured exports. Restrictions on capital flows tend to reduce real appreciation pressures and the severity of the Dutch disease. Countercyclical capital controls seem to help foster economic diversification in commodity-dependent developing countries.
Supplementary information: The online version contains supplementary material available at 10.1007/s00181-023-02423-9.
期刊介绍：
Empirical Economics publishes high quality papers using econometric or statistical methods to fill the gap between economic theory and observed data. Papers explore such topics as estimation of established relationships between economic variables, testing of hypotheses derived from economic theory, treatment effect estimation, policy evaluation, simulation, forecasting, as well as econometric methods and measurement. Empirical Economics emphasizes the replicability of empirical results. Replication studies of important results in the literature - both positive and negative results - may be published as short papers in Empirical Economics. Authors of all accepted papers and replications are required to submit all data and codes prior to publication (for more details, see: Instructions for Authors).The journal follows a single blind review procedure. In order to ensure the high quality of the journal and an efficient editorial process, a substantial number of submissions that have very poor chances of receiving positive reviews are routinely rejected without sending the papers for review.Officially cited as: Empir Econ
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