Foreign exchange intervention and the Dutch disease /:
We study the optimal foreign exchange (FX) intervention policy in response to a positive terms of trade shock and associated Dutch disease episode in a small open economy model. We find that during a Dutch disease episode tradable production drops below the socially optimal level, resulting in lower...
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| Hauptverfasser: | , , |
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| Format: | Elektronisch E-Book |
| Sprache: | English |
| Veröffentlicht: |
[Washington, D.C.] :
International Monetary Fund,
[2017]
|
| Schriftenreihe: | IMF working paper ;
WP/17/70. |
| Schlagworte: | |
| Online-Zugang: | Volltext |
| Zusammenfassung: | We study the optimal foreign exchange (FX) intervention policy in response to a positive terms of trade shock and associated Dutch disease episode in a small open economy model. We find that during a Dutch disease episode tradable production drops below the socially optimal level, resulting in lower welfare under learningby- doing (LBD) externalities. FX reserves accumulation improves welfare by preventing a large appreciation of the real exchange rate and by inducing an efficient reallocation between the tradable and non-tradable sectors. For an empirically plausible parametrization of LBD externalities, the model predicts that in response to a 10 percent increase in commodity prices FX reserves should increase by 1.5 percent of GDP. We also find that the welfare gains from optimally using FX reserves are twice as high as the gains from relying only on monetary policy. These results suggest that FX intervention is a beneficial policy to counteract the loss of competitiveness during a Dutch disease episode. |
| Beschreibung: | 1 online resource (35 pages) |
| ISBN: | 9781475589337 1475589336 |
| ISSN: | 1018-5941 1018-5941 ; |
Internformat
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| 245 | 1 | 0 | |a Foreign exchange intervention and the Dutch disease / |c by Julia Faltermeier, Ruy Lama, and Juan Pablo Medina. |
| 264 | 1 | |a [Washington, D.C.] : |b International Monetary Fund, |c [2017] | |
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| 505 | 0 | |a Cover; Contents; 1. Introduction; 2. A Small Open Economy Model; 2.1. Households; 2.2. Wage Setting Process; 2.3. Firms; 2.4. Commodity Sector; 2.5. Monetary Policy and Foreign Exchange Intervention; 2.6. Market Clearing Conditions; 2.7. Calibration; 3. Foreign Exchange Intervention and the Dutch Disease; 3.1. Dutch Disease and Learning-by-Doing Externalities; 3.2. Dutch Disease and Optimal Policy Rules; 3.3. Sensitivity Analysis; 4. Conclusions; References; Appendix: Equilibrium Conditions; Tables; Table 1 Baseline Calibration; Table 2 Welfare Analysis; Figures. | |
| 505 | 8 | |a Figure 1 Commodity Cycle and Foreign Exchange InterventionFigure 2 Effects of Learning-by-Doing; Figure 3 Dutch Disease and Policy Rules; Figure 4 Sensitivity Analysis; Figure 5 Welfare Gains and Sensitivity Analysis. | |
| 520 | 3 | |a We study the optimal foreign exchange (FX) intervention policy in response to a positive terms of trade shock and associated Dutch disease episode in a small open economy model. We find that during a Dutch disease episode tradable production drops below the socially optimal level, resulting in lower welfare under learningby- doing (LBD) externalities. FX reserves accumulation improves welfare by preventing a large appreciation of the real exchange rate and by inducing an efficient reallocation between the tradable and non-tradable sectors. For an empirically plausible parametrization of LBD externalities, the model predicts that in response to a 10 percent increase in commodity prices FX reserves should increase by 1.5 percent of GDP. We also find that the welfare gains from optimally using FX reserves are twice as high as the gains from relying only on monetary policy. These results suggest that FX intervention is a beneficial policy to counteract the loss of competitiveness during a Dutch disease episode. | |
| 650 | 0 | |a Foreign exchange rates. |0 http://id.loc.gov/authorities/subjects/sh91004893 | |
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| 700 | 1 | |a Lama, Ruy, |d 1975- |e author. |1 https://id.oclc.org/worldcat/entity/E39PCjrQrk6j6BJrQhcfW6xMj3 |0 http://id.loc.gov/authorities/names/n2003097517 | |
| 700 | 1 | |a Medina Guzman, Juan Pablo, |d 1971- |e author. |1 https://id.oclc.org/worldcat/entity/E39PBJpJgkMqCvxWpqyCpMT8md |0 http://id.loc.gov/authorities/names/no2005009315 | |
| 758 | |i has work: |a Foreign exchange intervention and the Dutch disease (Text) |1 https://id.oclc.org/worldcat/entity/E39PCGf67QpPGcq9bBR6Tyd4v3 |4 https://id.oclc.org/worldcat/ontology/hasWork | ||
| 776 | 0 | 8 | |i Print version: |a Faltermeier, Julia. |t Foreign Exchange Intervention and the Dutch Disease. |d Washington, D.C. : International Monetary Fund, ©2017 |z 9781475589238 |
| 830 | 0 | |a IMF working paper ; |v WP/17/70. |0 http://id.loc.gov/authorities/names/no89010263 | |
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| adam_text | |
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| author | Faltermeier, Julia Lama, Ruy, 1975- Medina Guzman, Juan Pablo, 1971- |
| author_GND | http://id.loc.gov/authorities/names/n2003097517 http://id.loc.gov/authorities/names/no2005009315 |
| author_facet | Faltermeier, Julia Lama, Ruy, 1975- Medina Guzman, Juan Pablo, 1971- |
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| collection | ZDB-4-EBA |
| contents | Cover; Contents; 1. Introduction; 2. A Small Open Economy Model; 2.1. Households; 2.2. Wage Setting Process; 2.3. Firms; 2.4. Commodity Sector; 2.5. Monetary Policy and Foreign Exchange Intervention; 2.6. Market Clearing Conditions; 2.7. Calibration; 3. Foreign Exchange Intervention and the Dutch Disease; 3.1. Dutch Disease and Learning-by-Doing Externalities; 3.2. Dutch Disease and Optimal Policy Rules; 3.3. Sensitivity Analysis; 4. Conclusions; References; Appendix: Equilibrium Conditions; Tables; Table 1 Baseline Calibration; Table 2 Welfare Analysis; Figures. Figure 1 Commodity Cycle and Foreign Exchange InterventionFigure 2 Effects of Learning-by-Doing; Figure 3 Dutch Disease and Policy Rules; Figure 4 Sensitivity Analysis; Figure 5 Welfare Gains and Sensitivity Analysis. |
| ctrlnum | (OCoLC)982012127 |
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| discipline | Wirtschaftswissenschaften |
| format | Electronic eBook |
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| id | ZDB-4-EBA-ocn982012127 |
| illustrated | Not Illustrated |
| indexdate | 2024-11-27T13:27:46Z |
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| isbn | 9781475589337 1475589336 |
| issn | 1018-5941 1018-5941 ; |
| language | English |
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| series | IMF working paper ; |
| series2 | IMF working paper, |
| spelling | Faltermeier, Julia, author. Foreign exchange intervention and the Dutch disease / by Julia Faltermeier, Ruy Lama, and Juan Pablo Medina. [Washington, D.C.] : International Monetary Fund, [2017] ©2017 1 online resource (35 pages) text txt rdacontent computer c rdamedia online resource cr rdacarrier IMF working paper, 1018-5941 ; WP/17/70 Print version record. Cover; Contents; 1. Introduction; 2. A Small Open Economy Model; 2.1. Households; 2.2. Wage Setting Process; 2.3. Firms; 2.4. Commodity Sector; 2.5. Monetary Policy and Foreign Exchange Intervention; 2.6. Market Clearing Conditions; 2.7. Calibration; 3. Foreign Exchange Intervention and the Dutch Disease; 3.1. Dutch Disease and Learning-by-Doing Externalities; 3.2. Dutch Disease and Optimal Policy Rules; 3.3. Sensitivity Analysis; 4. Conclusions; References; Appendix: Equilibrium Conditions; Tables; Table 1 Baseline Calibration; Table 2 Welfare Analysis; Figures. Figure 1 Commodity Cycle and Foreign Exchange InterventionFigure 2 Effects of Learning-by-Doing; Figure 3 Dutch Disease and Policy Rules; Figure 4 Sensitivity Analysis; Figure 5 Welfare Gains and Sensitivity Analysis. We study the optimal foreign exchange (FX) intervention policy in response to a positive terms of trade shock and associated Dutch disease episode in a small open economy model. We find that during a Dutch disease episode tradable production drops below the socially optimal level, resulting in lower welfare under learningby- doing (LBD) externalities. FX reserves accumulation improves welfare by preventing a large appreciation of the real exchange rate and by inducing an efficient reallocation between the tradable and non-tradable sectors. For an empirically plausible parametrization of LBD externalities, the model predicts that in response to a 10 percent increase in commodity prices FX reserves should increase by 1.5 percent of GDP. We also find that the welfare gains from optimally using FX reserves are twice as high as the gains from relying only on monetary policy. These results suggest that FX intervention is a beneficial policy to counteract the loss of competitiveness during a Dutch disease episode. Foreign exchange rates. http://id.loc.gov/authorities/subjects/sh91004893 Foreign exchange rates Econometric models. Monetary policy Econometric models. International finance Econometric models. Taux de change. Taux de change Modèles économétriques. Politique monétaire Modèles économétriques. BUSINESS & ECONOMICS Finance. bisacsh Foreign exchange rates fast Foreign exchange rates Econometric models fast International finance Econometric models fast Monetary policy Econometric models fast Lama, Ruy, 1975- author. https://id.oclc.org/worldcat/entity/E39PCjrQrk6j6BJrQhcfW6xMj3 http://id.loc.gov/authorities/names/n2003097517 Medina Guzman, Juan Pablo, 1971- author. https://id.oclc.org/worldcat/entity/E39PBJpJgkMqCvxWpqyCpMT8md http://id.loc.gov/authorities/names/no2005009315 has work: Foreign exchange intervention and the Dutch disease (Text) https://id.oclc.org/worldcat/entity/E39PCGf67QpPGcq9bBR6Tyd4v3 https://id.oclc.org/worldcat/ontology/hasWork Print version: Faltermeier, Julia. Foreign Exchange Intervention and the Dutch Disease. Washington, D.C. : International Monetary Fund, ©2017 9781475589238 IMF working paper ; WP/17/70. http://id.loc.gov/authorities/names/no89010263 FWS01 ZDB-4-EBA FWS_PDA_EBA https://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&AN=1496854 Volltext |
| spellingShingle | Faltermeier, Julia Lama, Ruy, 1975- Medina Guzman, Juan Pablo, 1971- Foreign exchange intervention and the Dutch disease / IMF working paper ; Cover; Contents; 1. Introduction; 2. A Small Open Economy Model; 2.1. Households; 2.2. Wage Setting Process; 2.3. Firms; 2.4. Commodity Sector; 2.5. Monetary Policy and Foreign Exchange Intervention; 2.6. Market Clearing Conditions; 2.7. Calibration; 3. Foreign Exchange Intervention and the Dutch Disease; 3.1. Dutch Disease and Learning-by-Doing Externalities; 3.2. Dutch Disease and Optimal Policy Rules; 3.3. Sensitivity Analysis; 4. Conclusions; References; Appendix: Equilibrium Conditions; Tables; Table 1 Baseline Calibration; Table 2 Welfare Analysis; Figures. Figure 1 Commodity Cycle and Foreign Exchange InterventionFigure 2 Effects of Learning-by-Doing; Figure 3 Dutch Disease and Policy Rules; Figure 4 Sensitivity Analysis; Figure 5 Welfare Gains and Sensitivity Analysis. Foreign exchange rates. http://id.loc.gov/authorities/subjects/sh91004893 Foreign exchange rates Econometric models. Monetary policy Econometric models. International finance Econometric models. Taux de change. Taux de change Modèles économétriques. Politique monétaire Modèles économétriques. BUSINESS & ECONOMICS Finance. bisacsh Foreign exchange rates fast Foreign exchange rates Econometric models fast International finance Econometric models fast Monetary policy Econometric models fast |
| subject_GND | http://id.loc.gov/authorities/subjects/sh91004893 |
| title | Foreign exchange intervention and the Dutch disease / |
| title_auth | Foreign exchange intervention and the Dutch disease / |
| title_exact_search | Foreign exchange intervention and the Dutch disease / |
| title_full | Foreign exchange intervention and the Dutch disease / by Julia Faltermeier, Ruy Lama, and Juan Pablo Medina. |
| title_fullStr | Foreign exchange intervention and the Dutch disease / by Julia Faltermeier, Ruy Lama, and Juan Pablo Medina. |
| title_full_unstemmed | Foreign exchange intervention and the Dutch disease / by Julia Faltermeier, Ruy Lama, and Juan Pablo Medina. |
| title_short | Foreign exchange intervention and the Dutch disease / |
| title_sort | foreign exchange intervention and the dutch disease |
| topic | Foreign exchange rates. http://id.loc.gov/authorities/subjects/sh91004893 Foreign exchange rates Econometric models. Monetary policy Econometric models. International finance Econometric models. Taux de change. Taux de change Modèles économétriques. Politique monétaire Modèles économétriques. BUSINESS & ECONOMICS Finance. bisacsh Foreign exchange rates fast Foreign exchange rates Econometric models fast International finance Econometric models fast Monetary policy Econometric models fast |
| topic_facet | Foreign exchange rates. Foreign exchange rates Econometric models. Monetary policy Econometric models. International finance Econometric models. Taux de change. Taux de change Modèles économétriques. Politique monétaire Modèles économétriques. BUSINESS & ECONOMICS Finance. Foreign exchange rates Foreign exchange rates Econometric models International finance Econometric models Monetary policy Econometric models |
| url | https://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&AN=1496854 |
| work_keys_str_mv | AT faltermeierjulia foreignexchangeinterventionandthedutchdisease AT lamaruy foreignexchangeinterventionandthedutchdisease AT medinaguzmanjuanpablo foreignexchangeinterventionandthedutchdisease |