Overvaluation of the Real Exchange Rate and the Dutch Disease: The Colombian Case

Goda, Thomas; Torres, Alejandro

doi:10.2139/ssrn.2390135

Cited by 7 publications

(3 citation statements)

References 39 publications

(37 reference statements)

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“…In this regard, our paper is an extension of some traditional Dutch disease models that formalize external imbalances into perfect-foresight infinite-lifetime frameworks, and therefore neglect exchange rate volatility and macroeconomic instability by assumption, since that external borrowing and rising foreign debt today are fully and safely repaid by increasing domestic savings and rising current account surpluses tomorrow (see Bruno and Sachs, 1982;Mansoorian, 1991). on the contrary, our model tries to merge together the existing literature on natural resource booms and the Dutch disease, with the longstanding heterodox concern for Minskyan exchange rate-external debt cycles (see Frenkel and Rapetti, 2009;Harvey, 2010) (Goda and Torres, 2013;oECD, 2013).…”

Section: Natural Resource Booms Capital Inflows and External Balancementioning

confidence: 99%

Dutch Disease-cum-financialization Booms and External Balance Cycles in Developing Countries

Botta

2017

Brazil. J. Polit. Econ.

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RESUMo: Neste artigo nós investigamos a dinâmica de médio a longo prazo que emerge do fenômeno da doença holandesa com financeirização. Nós nos inspiramos no caso mais recente do padrão de desenvolvimento da Colômbia. A doença holandesa "pura" causa desindustrialização, em primeiro lugar, ao apreciar permanentemente a taxa de câmbio no longo prazo. A financeirização neste caso, isto é, os maiores influxos de capital em um cenário de excesso de otimismo financeiro puxado pela existência de recursos naturais, leva no médio prazo a uma maior volatilidade na taxa de câmbio e à instabilidade macroeconômica. Este processo prejudica ainda mais o desenvolvimento do setor manufatureiro ao aumentar a incerteza na economia. A recomendação é, portanto, pela adoção do controle de capitais e por uma política monetária desenvolvimentista a fim de confrontar os fenômenos da financeirização e da doença holandesa. PALAVRAS-CHAVE: Doença holandesa; financeirização; volatilidade cambial; política monetária desenvolvimentista.ABSTRACT: We formally investigate the medium-to-long-run dynamics emerging out of a Dutch disease-cum-financialization phenomenon. We take inspiration from the most recent Colombian development pattern. The "pure" Dutch disease first causes deindustrialization by permanently appreciating the economy's exchange rate in the long run. Financialization, i.e., booming capital inflows taking place in a climate of natural resource-led financial overoptimism, causes medium-run exchange rate volatility and macroeconomic instability. This jeopardizes manufacturing development even further by raising macroeconomic uncertainty. We advise the adoption of capital controls and a developmentalist monetary policy to tackle these two distinct but often intertwined phenomena.

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Section: Natural Resource Booms Capital Inflows and External Balancementioning

confidence: 99%

Dutch Disease-cum-financialization Booms and External Balance Cycles in Developing Countries

Botta

2017

Brazil. J. Polit. Econ.

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“…Spill-overs on the local economy might relate, among others issues, to technology transfer, managerial best practices, skill developments, and research and development activities. The arrival of longterm flows might not be rewarding, and they may even be not desirable for sustainable development (CLAESSENS et al, 2003;GODA;TORRES, 2013;IBARRA, 2011;RAY, 2016;RAY et al, 2017;RODRIK;SUBRAMA-NIAN, 2009;SABOROWSKI, 2009;TIENHAARA, 2009).…”

Section: Foreign Investors Treatment: What Protection Promotion Andmentioning

confidence: 99%

Foreign investor's rights, investment promotion and facilitation agencies: a developmental and sustainable vision

Stanley¹

2020

Estudos Internacionais

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Fifty years ago, the role of foreign investors was at the center of the political debate, with host state - investors disputes showing a geographical North-Southth pattern. The end of the ISI model would signal a new era, including a new relationship with foreign investors. As part of their efforts, developing and emerging countries (DECs) liberalize foreign direct investment (FDI) national policies and to provide fiscal and other incentives to foreign investors. FDI flows were seen as always beneficial: a quantitative approach. Sooner than later, however, policy-makers became aware of the scheme’s pro-investment bias. FDI quality, not quantity, became the new ideal. Latin American countries’ position in the issue, however, remains quantitative objectives still dominate the investment debate. Indeed, a movement towards sustainability would come to question the natural-resource led growth model followed by the region. So, the debate around the treatment of foreign investors remains open.

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“…El boom de los commodities que ha venido acompañado de otro boom financiero en la balanza de pagos ha desencadenado la reaparición de la enfermedad holandesa con sus consecuencias contractivas en las actividades transables, especialmente en la manufactura y la agricultura (Botta, Godin, y Missaglia, 2014;Goda y Torres, 2013). Por supuesto, hizo más dependiente la economía de los ingresos petroleros junto con la cada vez mayor necesidad de financiamiento externo.…”

Section: Sector Externounclassified

Financiamiento especulativo de la vivienda en Colombia: un análisis de la dinámica de los precios, 2000-2016

Mora¹,

Rodríguez²,

Barrera

2018

Semest. Econ.

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El presente trabajo estudia la dinámica de los precios de la vivienda en Colombia para el periodo 2000 a 2016. Se presentan los fundamentos teóricos no-convencionales para la determinación del precio, junto con dos estrategias cuantitativas: 1) un estudio descriptivo del mercado y la posible fragilidad financiera que ha permitido el incremento de los precios de la vivienda nueva; y 2) un modelo econométrico VEC que captura los determinantes de corto y largo plazo del precio. Se concluye que la dinámica del precio de la vivienda está influenciada por el crédito hipotecario y los costos de construcción, y presenta una fuerte relación de largo plazo entre el comportamiento actual y previo de los precios, evidentes en los escenarios financieros especulativos.

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Overvaluation of the Real Exchange Rate and the Dutch Disease: The Colombian Case

Cited by 7 publications

References 39 publications

Dutch Disease-cum-financialization Booms and External Balance Cycles in Developing Countries

Dutch Disease-cum-financialization Booms and External Balance Cycles in Developing Countries

Foreign investor's rights, investment promotion and facilitation agencies: a developmental and sustainable vision

Financiamiento especulativo de la vivienda en Colombia: un análisis de la dinámica de los precios, 2000-2016

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