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

Serie

• Documentos de Trabajo CIEF

Resumen

• In this study, we estimate the impact of the 2004-2012 energy and mining boom on the real effective exchange rate in Colombia and the sectoral composition of its economy. To this end, we introduce the new “extended Dutch Disease” concept, according to which a currency appreciation may not only occur due to traditional “spending” and “relocation” effects but also due to exports and massive inflows of external capital that finances the booming sector. The empirical results indicate that Colombia experienced an overvaluation of its real exchange rate, which in turn negatively affected the competitiveness of its manufacturing and agricultural sector.

autores

• Goda, Thomas
• Torres García, Alejandro

fecha de publicación

• 2013-11

Área temática

• F4 - Aspectos macroeconómicos del comercio y las finanzas internacionales
• O13 - Agricultura; Recursos naturales; Energía; Medio ambiente; Otros productos primarios
• O14 - Industrialización; Industrias manufactureras y de servicios; Elección de tecnología
• O54 - Estudios económicos globales de países: América Latina; Caribe

Enfoque geográfico

• Colombia  Country
• South America  Continent

Líneas de investigación

• Capital Flows
• Colombia
• Deindustrialization
• Dutch Disease
• Latin America
• Real Effective Exchange Rate

Issue

• 10930