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Real exchanges rates in commodity producing countries: A reappraisal

Vincent Bodart, Bertrand Candelon and Jean-François Carpantier

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Abstract: Commodity price booms, as those recorded in the last decade, may have a significant economic impact in small, commodity exporting, developing countries. Whether the impact on output is positive or negative is still unclear. It depends on various factors, notably on the impact that commodity prices can have on the real exchange rate of the commodity exporting countries. Two recent papers show that the real exchange rate appreciates when commodity prices increase. Our analysis produces new estimates of this relationship by focusing on a large sample of developing countries which are specialized in the export of one leading 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 this share, the larger the size of the impact.

Keywords: Commodity producers; Commodity prices; Natural resource curse; Non-stationary panel; Real exchange r (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (66)

Published in Journal of International Money and Finance, 2012, 31 (6), pp.1482-1502. ⟨10.1016/j.jimonfin.2012.0⟩

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Journal Article: Real exchanges rates in commodity producing countries: A reappraisal (2012) Downloads
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Working Paper: Real Exchanges Rates in Commodity Producing Countries: A Reappraisal (2011) Downloads
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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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01821146

DOI: 10.1016/j.jimonfin.2012.0

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