Demystifying Dutch Disease
This paper examines the theory of Dutch disease and its implications for practical policy questions. Dutch disease is a term that is well-known to economists and development practitioners. But it is also a concept that is often conflated with "...
| Main Author: | |
|---|---|
| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank Group, Washington, DC
2014
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2014/07/19893937/demystifying-dutch-disease http://hdl.handle.net/10986/19345 |
| id |
okr-10986-19345 |
|---|---|
| recordtype |
oai_dc |
| spelling |
okr-10986-193452021-04-23T14:03:52Z Demystifying Dutch Disease Kojo, Naoko C. DUTCH DISEASE FOREIGN CURRENCY INFLOWS GLOBAL AND DOMESTIC ECONOMIC ENVIRONMENTS SAFEGUARDING THE DOMESTIC ECONOMY TRADE FLOWS This paper examines the theory of Dutch disease and its implications for practical policy questions. Dutch disease is a term that is well-known to economists and development practitioners. But it is also a concept that is often conflated with "resource curse" and misinterpreted as a "disease" that necessarily causes adverse impacts on the economy. The paper points out that many of the seemingly well-established arguments in this field are not necessarily grounded in theory or empirical evidence. Great care is needed in diagnosing Dutch disease and formulating policy prescriptions based on the theoretical framework, given the restrictive assumptions that may not be fully applicable and the limited relevance to today s inextricably intertwined trade flows. Countries facing large inflows of foreign currency should focus on safeguarding the domestic economy from the volatility of international commodity and capital markets, and building robust institutions to reduce adjustment costs and boost broader competitiveness. A policy package needs to be comprehensive, covering macroeconomic and structural policy measures, and should be calibrated to target country specific concerns. Policies may need to be adjusted continuously in view of the evolving dynamics of the global and domestic economic environment. 2014-08-15T14:31:26Z 2014-08-15T14:31:26Z 2014-07 http://documents.worldbank.org/curated/en/2014/07/19893937/demystifying-dutch-disease http://hdl.handle.net/10986/19345 English en_US Policy Research Working Paper;No. 6981 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Group, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
DUTCH DISEASE FOREIGN CURRENCY INFLOWS GLOBAL AND DOMESTIC ECONOMIC ENVIRONMENTS SAFEGUARDING THE DOMESTIC ECONOMY TRADE FLOWS |
| spellingShingle |
DUTCH DISEASE FOREIGN CURRENCY INFLOWS GLOBAL AND DOMESTIC ECONOMIC ENVIRONMENTS SAFEGUARDING THE DOMESTIC ECONOMY TRADE FLOWS Kojo, Naoko C. Demystifying Dutch Disease |
| relation |
Policy Research Working Paper;No. 6981 |
| description |
This paper examines the theory of Dutch
disease and its implications for practical policy questions.
Dutch disease is a term that is well-known to economists and
development practitioners. But it is also a concept that is
often conflated with "resource curse" and
misinterpreted as a "disease" that necessarily
causes adverse impacts on the economy. The paper points out
that many of the seemingly well-established arguments in
this field are not necessarily grounded in theory or
empirical evidence. Great care is needed in diagnosing Dutch
disease and formulating policy prescriptions based on the
theoretical framework, given the restrictive assumptions
that may not be fully applicable and the limited relevance
to today s inextricably intertwined trade flows. Countries
facing large inflows of foreign currency should focus on
safeguarding the domestic economy from the volatility of
international commodity and capital markets, and building
robust institutions to reduce adjustment costs and boost
broader competitiveness. A policy package needs to be
comprehensive, covering macroeconomic and structural policy
measures, and should be calibrated to target country
specific concerns. Policies may need to be adjusted
continuously in view of the evolving dynamics of the global
and domestic economic environment. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Kojo, Naoko C. |
| author_facet |
Kojo, Naoko C. |
| author_sort |
Kojo, Naoko C. |
| title |
Demystifying Dutch Disease |
| title_short |
Demystifying Dutch Disease |
| title_full |
Demystifying Dutch Disease |
| title_fullStr |
Demystifying Dutch Disease |
| title_full_unstemmed |
Demystifying Dutch Disease |
| title_sort |
demystifying dutch disease |
| publisher |
World Bank Group, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2014/07/19893937/demystifying-dutch-disease http://hdl.handle.net/10986/19345 |
| _version_ |
1764443785643687936 |