Real exchanges rates in commodity producing countries: A reappraisal

Vincent Bodart, Bertrand Candelon and Jean-François Carpantier

No 2011006, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: Commodity currency literature recently stressed the importance of commodity prices as a determinant of real exchange rates in developing countries (Cashin, Cespedes and Sahay 2004). We provide new empirical evidence on this issue by focusing on countries which are specialized in the ex-port of one leading commodity. For those countries, we investigate to which extent their real exchange rate is sensitive to price fluctuations of their dominant commodity. By using non-stationary panel techniques robust to cross-sectional-dependence, we find that the price of the dominant commodity has a significant long-run impact on the real exchange rate when the exports of the leading commodity have a share of at least 20 percent in the country’s total exports of merchandises. Our results also show that the larger the share, the larger the size of the impact.

Keywords: real exchange rates; commodity prices; non-stationary panel (search for similar items in EconPapers)
JEL-codes: C32 C33 E31 F32 O11 (search for similar items in EconPapers)
Date: 2011-02-01
New Economics Papers: this item is included in nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Real exchanges rates in commodity producing countries: A reappraisal (2012)
Working Paper: Real exchanges rates in commodity producing countries: A reappraisal (2012)
Working Paper: Real Exchanges Rates in Commodity Producing Countries: A Reappraisal (2011)
Working Paper: Real exchanges rates in commodity producing countries: A reappraisal (2011)
Working Paper: Real Exchanges Rates in Commodity Producing Countries: A Reappraisal (2011)
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