Managing the Impact of Resource Booms on the Real Effective Exchange Rate: The Role of Financial Sector Development
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Summary:
Whereas most of the literature related to the so-called “resource curse” tends to emphasize on institutional factors and public policies, in this research we focus on the role of the financial sector, which has been surprisingly overlooked. We find that countries that have financial systems with more depth, as well as those that actively manage their central banks’ balance sheets experience less exchange-rate appreciation than countries that do not. We analyze the relationship between these two findings and suggest that they appear to follow separate mechanisms.
Series:
Working Paper No. 2021/073
Subject:
Central banks Economic sectors Environment Financial crises Financial markets Financial sector Financial sector development Foreign exchange Natural resources Real effective exchange rates Sterilization
Frequency:
regular
English
Publication Date:
March 12, 2021
ISBN/ISSN:
9781513572659/1018-5941
Stock No:
WPIEA2021073
Pages:
24
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