Oil-Price Boom and Real Exchange Rate Appreciation: Is there Dutch Disease in the Cemac?

November 1, 2011

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Format: Chicago

Juan P Trevino. Oil-Price Boom and Real Exchange Rate Appreciation: Is there Dutch Disease in the Cemac?, (USA: International Monetary Fund, 2011) accessed December 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The paper employs a heuristic comparative approach suggested by Ismail (2009) to search for evidence of Dutch disease in oil-rich countries of the Central African Economic and Monetary Community (CEMAC). While these countries have benefitted from high international oil prices in recent years, they have also experienced relatively large real exchange rate appreciations, raising concerns regarding the presence of Dutch disease and casting doubts on their ability to achieve high growth and employment in the long run. To isolate from any dynamics related to the exchange rate regime, we focus on the 14 member countries that constitute the CFA franc zone. We separate them into net oil importers and net oil exporters and look at economic growth, the real exchange rate, and the agricultural and external sectors. Based on traditional models, our findings are broadly consistent with the presence of Dutch disease in the second group during the oil-price boom. Departing from these models yields mixed results, suggesting the need to employ a case-by-case approach.

Subject: Commodities, Exchange rate adjustments, Expenditure, Foreign exchange, Oil, Oil production, Production, Real exchange rates

Keywords: Appreciation, Appreciation result, Dutch disease, Effect of an increase, Exchange rate adjustments, Government spending, Growth, Movement effect, Natural resource, Natural resources, Oil, Oil production, Real exchange rate, Real exchange rates, Resource, Resource curse, Resource movement effect, Sub-Saharan Africa, WP

Publication Details

Pages:

29
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2011/268
Stock No:

WPIEA2011268
ISBN:

9781463924676
ISSN:

1018-5941

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