A graphic explanation on how a tax on exports neutralizes the Dutch disease without costs to exporters

Luiz Carlos Bresser-Pereira ()

Brazilian Journal of Political Economy, 2012, vol. 32, issue 4, 700-702

Abstract: The adequade way of neutralizing the Dutch disease is the imposition of a variable tax on the export of the commodity that originates the disease. If such tax is equivalent to the "size" of the Dutch disease, it will shifts to the right its supply curve of the commodity in relation to the exchange rate, giving the existing domestic sypply and the international demand, the exchange rate will depreciate at the value of the tax, and the quiligrium exchange rate will move from the "current" to the "industrial" equilibrium. JEL Classification: F31; F4; O11.

Keywords: exchange rate; Dutch disease; tax on exports (search for similar items in EconPapers)
Date: 2012
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