In this paper, we analyze the impact of terms of trade and risk-premium shocks on a small open economy in an intertemporal Dutch disease model, with international capital mobility. Given that an improvement in the terms of trade is associated with a decrease in the risk-premium on lending to this economy, we find that this can lead to a Dutch party (rather than Dutch disease) in which real exchange rate appreciation is associated with an expansion of the capital-intensive traded sector, hence...Expand abstract
- Open Economies Review
- Publication date:
- Local pid:
- Copyright date:
Shocks to Terms of Trade and Risk-Premium in an Intertemporal Model: The Dutch Disease and a Dutch Party.
Views and Downloads
If you are the owner of this record, you can report an update to it here: Report update to this record