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Exchange Rate Policy and the Resources Boom

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  • W. M. CORDEN

Abstract

This paper considers some policy choices posed by the prospective Australian resources boom, distinguishing between the investment boom and the export boom and between the adjustment and the non‐adjustment options. With adjustment both booms are likely to lead to real appreciation, raising the ‘Dutch disease’ issues. Non‐adjustment means accumulating foreign exchange reserves by preventing both nominal appreciation and inflation. It is discussed whether protection by tariffs or quotas should be lowered or raised because of the export boom. An Appendix analyzes the monetary policy implications of both the floating rate (adjustment) and the fixed rate (non‐adjustment) cases.

Suggested Citation

  • W. M. Corden, 1982. "Exchange Rate Policy and the Resources Boom," The Economic Record, The Economic Society of Australia, vol. 58(1), pages 18-31, March.
    • Handle: RePEc:bla:ecorec:v:58:y:1982:i:1:p:18-31
    DOI: 10.1111/j.1475-4932.1982.tb00346.x
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    Cited by:

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    6. Majah-Leah Ravago & James Roumasset, 2009. "Economic Policy for Sustainable Growth and Development vs. Greedy Growth and Preservationism," Working Papers 200909, University of Hawaii at Manoa, Department of Economics.
    7. Qiang, Ye, 1999. "How different is mining from mineral processing? A general equilibrium analysis of new resources projects in Western Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 43(3), pages 1-26, September.
    8. Grant Mark Nülle & Graham A. Davis, 2018. "Neither Dutch nor disease?—natural resource booms in theory and empirics," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 31(1), pages 35-59, May.
    9. Clements, Kenneth & Lan, Yihui & Roberts, John, 2008. "Exchange-rate economics for the resources sector," Resources Policy, Elsevier, vol. 33(2), pages 102-117, June.
    10. Azarhoushang, Behzad & Rukavina, Marko, 2014. "Resource curse: A comparative study," IPE Working Papers 30/2014, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    11. Anderson, Kym, 1983. "Economic Growth, Comparative Advantage and Agricultural Trade of Pacific Rim Countries," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 51(03), pages 1-18, December.
    12. Yihui Lan, 2003. "The Long-Term Behaviour of Exchange Rates, Part II: Aspects of Exchange-Rate Economics," Economics Discussion / Working Papers 03-06, The University of Western Australia, Department of Economics.
    13. Anderson, Kym & Strutt, Anna, 2012. "Growth in Emerging Economies: Implications for Resource-Rich Countries by 2030," Conference papers 332283, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    14. John J. Struthers, 1990. "Nigerian Oil and Exchange Rates: Indicators of ‘Dutch Disease’," Development and Change, International Institute of Social Studies, vol. 21(2), pages 309-341, April.
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    16. Majah-Leah Ravago & James Roumasset & Kimberly Burnett, 2008. "Resource management for Sustainable Development of Island Economies," Working Papers 200804, University of Hawaii at Manoa, Department of Economics.
    17. Ye, Qiang, 2008. "Commodity booms and their impacts on the Western Australian economy: The iron ore case," Resources Policy, Elsevier, vol. 33(2), pages 83-101, June.
    18. Clements, Kenneth W. & Ahammad, Helal & Qiang, Ye, 1996. "New mining and mineral-processing projects in Western Australia: Effects of employment and the macro-economy," Resources Policy, Elsevier, vol. 22(4), pages 293-346, December.
    19. Stephen J. Turnovsky, 1983. "Expanding Exports and the Structure of the Domestic Economy: A Monetary Analysis," The Economic Record, The Economic Society of Australia, vol. 59(3), pages 245-259, September.
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    22. Carlos Barros, 2012. "The Resource Curse and Rent-Seeking in Angola," CEsA Working Papers 102, CEsA - Centre for African and Development Studies.

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