Revisiting the commodity curse: A financial perspective

Abstract

We study the response of a three-sector commodity-exporter small open economy to a commodity price boom. When the economy has access to international borrowing and lending, a temporary commodity price boom brings about the standard wealth effect that stimulates demand and has long-run implications on the sectoral allocation of labour. If dynamic productivity gains are concentrated in the traded goods sector, the commodity boom crowds out the traded sector and delays convergence to the world technology frontier. Financial openness by stimulating current demand, amplifies the crowding out effect and may even lead to a growth trap, in which no resources are allocated to the traded sector. From a normative point of view, our analysis suggests that capital account management policies could be welfare improving in those circumstances.

The Transmission of Commodity Price Super-Cycles

“…To highlight the economic roots of the channels, we use the term cost channel instead of resource movement effect used in Corden and Neary [1982]. We extend the original spending channel to allow for consumption smoothing with an endogenous current account as in Alberola and Benigno [2017]. To account for this extension and avoid confusion with the static spending effect in Corden and Neary [1982] we denote it wealth channel.…”

The Dutch disease revisited: absorption constraint and learning by doing

“…As in Sachs and Warner (1995), productivity growth is driven by learning being external to …rms in the traded sector (i.e. A t = A T t ) with perfect spillovers to non-traded sector 1 :…”

“…More speci…cally, Sachs and Warner (1995) extended the work of Matsuyama (1992) by constructing an overlapping generations model of endogenous growth in which the key assumption about technical progress is that the accumulation of knowledge is generated exclusively in the traded sector of the economy as a by-product of the employment level. The theoretical analysis of a three-sector resource-rich small open economy in Alberola and Benigno (2017) has recently con…rmed the result that, if productivity gains are exclusively concentrated in the sector of tradable goods, then resource boom has detrimental e¤ect on the traded sector and slows down productivity growth. Notice that the assumption of learning by doing taking place only in one sector simpli…es the analytical tractability of the model, but bears some costs.…”

The factor of resource richness in the implementation of macro-prudential policies

“…Вовторых, существует очень большой риск системной уязвимости экспансии кредита в секторах, не связанных с экспортом, в результате чего финансовая система становится крайне уязвимой к ценовым шокам в условиях высокого уровня левериджа. Также переключение кредита на неэкспортные сектора ухудшает будущие перспективы повышения потенциала экономики (Turner, 2016;Alberola, Benigno, 2017). В-третьих, макропруденциальная политика может помочь в предотвращении "голландской болезни".…”

“…Достижение этого может происходить через канал ограничения переоценки валютного курса в результате увязки между притоком капитала, бумом кредитования и ухудшением платёжного баланса изза расширения потребления не-экспортным сектором. Другим каналом является потенциальная эффективность ограничений на секторную концентрацию кредита, что косвенно будет побуждать к расширению доступа к кредиту заёмщиков из других секторов (Turner, 2016;Masson, 2014;Alberola, Benigno, 2017;Gonzalez, Hamann at al., 2015).…”