Shocks to Terms of Trade and Risk-premium in an Intertemporal Model: The Dutch Disease and a Dutch Party |
| |
Authors: | Karlygash Kuralbayeva David Vines |
| |
Institution: | (1) University of Oxford, Oxford, UK |
| |
Abstract: | In this paper, we analyze the impact of terms of trade and risk-premium shocks on a small open economy in an intertemporal
Dutch disease model, with international capital mobility. Given that an improvement in the terms of trade is associated with
a decrease in the risk-premium on lending to this economy, we find that this can lead to a Dutch party (rather than Dutch
disease) in which real exchange rate appreciation is associated with an expansion of the capital-intensive traded sector,
hence, pro-industrialization. The economy also accumulates more debt in the long-run in response to the lower borrowing costs.
|
| |
Keywords: | Capital inflows Dutch disease External debt Real exchange rate Optimizing models |
本文献已被 SpringerLink 等数据库收录! |