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Is Exchange Rate Stabilization an Appropriate Cure for the Dutch Disease?

Author

Listed:
  • Chris Kubelec

    (Royal Bank of Scotland)

  • Filipa Sá

    (The Geographical Composition of National External Balance Sheets: 1980-2005)

Abstract

This paper constructs a data set on the stocks of bilateral external assets and liabilities for eighteen countries in the period from 1980 to 2005. It distinguishes between four asset classes: foreign direct investment, portfolio equity, debt, and foreign exchange reserves. Network methods are used to explore the key facts that emerge from the data. We find that there has been a remarkable increase in interconnectivity over the past two decades and that this has been centered around a small number of countries. In a simulation exercise we show that shocks to one of the central countries generate much larger losses to the network than shocks to the periphery.

Suggested Citation

  • Chris Kubelec & Filipa Sá, 2012. "Is Exchange Rate Stabilization an Appropriate Cure for the Dutch Disease?," International Journal of Central Banking, International Journal of Central Banking, vol. 8(2), pages 143-189, June.
    • Handle: RePEc:ijc:ijcjou:y:2012:q:2:a:5
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    References listed on IDEAS

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