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Coffee export booms and monetary disequilibrium: some evidence for Colombia

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  • Jesus Otero

Abstract

The theoretical models that analyse the monetary consequences of export booms show that under a regime of fixed exchange rates, they affect not only the demand for money, via real income, but also the money supply via foreign exchange accumulation. Within this theoretical framework, this study proposes an empirical approach to determine whether the coffee booms of the second half of the 1970s and mid-1980s led to excess money supply in the Colombian economy. The findings provide evidence in favour of a direct association between coffee export booms and excess money supply, implying that external disturbances jeopardize the ability of the economic authorities to carry out successful monetary policy.

Suggested Citation

  • Jesus Otero, 2001. "Coffee export booms and monetary disequilibrium: some evidence for Colombia," Applied Economics, Taylor & Francis Journals, vol. 33(2), pages 267-276.
  • Handle: RePEc:taf:applec:v:33:y:2001:i:2:p:267-276
    DOI: 10.1080/00036840121935
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    Cited by:

    1. Mehta, Aashish & Chavas, Jean-Paul, 2008. "Responding to the coffee crisis: What can we learn from price dynamics?," Journal of Development Economics, Elsevier, vol. 85(1-2), pages 282-311, February.
    2. Andrea Bastianin & Alessandro Lanza & Matteo Manera, 2018. "Economic impacts of El Niño southern oscillation: evidence from the Colombian coffee market," Agricultural Economics, International Association of Agricultural Economists, vol. 49(5), pages 623-633, September.
    3. Raju, Sudhakar S. & Melo, Alberto, 2003. "Money, real output, and deficit effects of coffee booms in Colombia," Journal of Policy Modeling, Elsevier, vol. 25(9), pages 963-983, December.

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