Recovery from Dutch Disease

Dungey, Mardi; Fry-McKibbin, Renée; Todoroski, Verity; Volkov, Vladimir

doi:10.2139/ssrn.3066455

Cited by 3 publications

(15 citation statements)

References 17 publications

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“…The real exchange rate variable (q t ) utilizes the Central Bank of Brazil's trade weighted index expressed in real terms using the Broad National Consumer Price Index (IPCA). The inclusion of the real exchange rate links with the literature on the influence of external shocks on EMEs (Shousha, 2016;Fernández et al, 2018;Zeev et al, 2017;Drechsel and Tenreyro, 2018) and also to the literature on the impact of commodity booms on commodity-exporting economies (Dungey et al, 2014(Dungey et al, , 2017Corden, 1984;Corden and Neary, 1982;Frankel, 2012;van Wijnbergen, 1984). Appendix A contains full details of the data and data sources.…”

Section: Domestic Variablesmentioning

confidence: 90%

“…However, the domestic variables are able to affect the external sector with a lag. There is evidence of some market power of commodity-exporting economies in commodity markets, so this assumption allows for this channel if, in fact, this occurs in the data for the case of Brazil (Clements and Fry, 2008;Dungey et al, 2017).…”

Section: Model Estimation Begins With the Reduced Form Representationmentioning

confidence: 99%

“…Steel production in China and real commodity prices converge to their initial values approximately six years after the shock. The characteristics of the shock are akin to those of a demand shock, and the duration of the shock is the same as in Dungey et al (2017).…”

Section: Shock To Chinese Resource Demandmentioning

confidence: 99%

“…The emergence of China as an economic powerhouse has contributed to the rapid transformation of the structure of the global economy (Jenkins, 2014). In particular, the unprecedented demand for natural resources for purposes of industrialization and urbanization has led to potentially substantial spillover effects for commodity-exporting countries (Cesa-Bianchi et al, 2012;Dungey et al, 2014Dungey et al, , 2017. The empirical evidence suggests that the impacts of Chinese economic shocks on a typical Latin American economy have tripled since mid-1990(Cesa-Bianchi et al, 2012.…”

Section: Introductionmentioning

confidence: 99%

“…Dungey et al (2014) found that shocks to Chinese resource demand and commodity prices led to lower Australian output after the first year due to falls in non-resource sector output, which was not offset by an increase in the resource output sector, which is consistent with the symptoms of Dutch disease. Subsequently, Dungey et al (2017) found reduced evidence of Dutch disease in the Australia economy in the aftermath of the end of the commodity price boom. The authors showed that Chinese resource demand explains less than 4% of the variance in Australian output, and commodity prices explain less than 6% in the longer time horizon.…”

Section: Introductionmentioning

confidence: 99%

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Chinese Resource Demand or Commodity Price Shocks: Macroeconomic Effects For an Emerging Market Economy

Fry-McKibbin

Souza

2018

SSRN Journal

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This paper empirically addresses the hypothesis that of the external commodity based sector, Chinese resource demand is the most important driver of emerging market economy business cycles using Brazil as a representative case. Using a structural VAR to examine the effects of Chinese resource demand, world commodity prices and foreign output on domestic macroeconomic variables, we show that shocks to Chinese demand induce an expansion in Brazilian resource exports, the non-tradeable primary commodity sector and other domestic activity. Commodity price shocks are less favorable than Chinese resource demand shocks. Our findings identify the important role of the interest rate in amplifying the real effects of the commodity sector boom, in contrast to the role of the interest rate in developed countries. By incorporating Chinese resource demand in addition to commodity prices, commodity prices play a smaller role in explaining the variance of domestic output than found in previous literature.

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Section: Domestic Variablesmentioning

confidence: 90%

Section: Model Estimation Begins With the Reduced Form Representationmentioning

confidence: 99%

Section: Shock To Chinese Resource Demandmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Chinese Resource Demand or Commodity Price Shocks: Macroeconomic Effects For an Emerging Market Economy

Fry-McKibbin

Souza

2018

SSRN Journal

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Potential Output in a Commodity‐Exporting Economy*

Yamout

2021

Economic Record

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The surge in global demand for natural resources has driven the terms of trade in commodity‐exporting economies to historically high levels. A critical question is how the upswing in commodity prices influences these economies' potential output. I estimate the potential output and output gap that are consistent with a small open economy model featuring a commodities sector and study the implications of permanent commodity price changes on potential output and output gap. Following a 70 per cent permanent commodity price increase, the output gap improves on impact but deteriorates afterwards, falling to −0.75 per cent in the transition.

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The Industrial Impact of Economic Uncertainty Shocks in Australia*

Burrell

Vespignani

2021

J of App Econs and Policy

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This study establishes the first empirical evidence of the impact of economic uncertainty shocks on industry-level investment, output and employment in Australia. We find the Construction and Financial and Insurance Services industries are the most impacted by a shock to economic uncertainty. Statistically significant declines are observed for investment, output and employment in the Construction industry, and in terms of magnitude, the declines in output and employment are the largest across all industries studied. Likewise, the Financial and Insurance Services industry experiences declines across investment, output and employment, and undergoes the largest decline in investment in comparison to all other industries examined. Economic uncertainty explains the most substantial portion of the variation in Financial and Insurance Services investment and output, highlighting the detrimental effect it has on the Financial and Insurance Services industry. Furthermore, Health Care and Social Assistance output and Professional, Scientific and Technical Services investment experience considerable declines, and in contrast, Public Administration and Safety is shown to be the least impacted industry.

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Recovery from Dutch Disease

Cited by 3 publications

References 17 publications

Chinese Resource Demand or Commodity Price Shocks: Macroeconomic Effects For an Emerging Market Economy

Chinese Resource Demand or Commodity Price Shocks: Macroeconomic Effects For an Emerging Market Economy

Potential Output in a Commodity‐Exporting Economy*

The Industrial Impact of Economic Uncertainty Shocks in Australia*

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