Diminishing commodity prices in a Dutch disease and resource blessing/curse environment

Gover Barja Daza and David Zavaleta Castellón

EconStor Preprints from ZBW - Leibniz Information Centre for Economics

Abstract: A Computable General Equilibrium model is used to analyze commodity shocks in an abundant natural resource country (Bolivia), with two export-oriented resource sectors (oil & gas and minerals), two emerging tradable sectors (food and manufacturing) with a dominant import substitution orientation, and several non-tradable sectors. The objective is to study how the structure of the economy changed in the period of high international resource prices and how that structure would change again in the new period of low prices. In the process, the Bolivian experience with Dutch disease and resource blessing/curse is discovered, which helps to understand the conditions and characteristics of the boom reversal. Is Bolivia prepared?

Keywords: Natural resources; external shocks; real exchange rate; Dutch disease; commodity prices; resource curse; Bolivia; CGE (search for similar items in EconPapers)
Date: 2016
Note: Published in Spanish at the Revista Latinoamericana de Desarrollo Económico, N° 25, mayo 2016, 7-40. The paper is a chapter of the document titled “Diminishing Commodity Prices and Capital Flight in a Dutch Disease and Resource Curse Environment: The Case of Bolivia in the Post Crisis,” written by Gover Barja, Bernardo X. Fernández and David Zavaleta in 2014 for the IADB’s Latin America and Caribbean Research Network as part of their research project “Macroeconomic and Financial Challenges Facing Latin America and the Caribbean after the Crisis, 2013-14” directed by Andrew Powell. The authors thank the comments received at the 9th Applied Research Workshop organized by ISSEC and ARU in December 2014, the 20th LACEA annual meeting of October 2015, and the Bolivian Fundación Jubileo meeting of November 2015. We also thank the Latin America and Caribbean Research Network for their initiative and financing.
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