The value of the exchange rate and the Dutch disease

This paper revisits the original (2008) paper on the Dutch disease, which defined it by the existence of two exchange rate equilibriums (the current and the industrial exchange rate equilibriums). Its novelty is in claiming that, as we have a value and a market price for each good or service, we also have a value and a market price for foreign money. The value is the cost plus reasonable profit corresponding to the exchange rate that makes competitive the country's competent business enterprises; the nominal exchange rates floats around the value according to the demand and supply of foreign m... Mehr ...

Verfasser: Luiz Carlos Bresser-Pereira
Dokumenttyp: Artikel
Erscheinungsdatum: 2013
Reihe/Periodikum: Brazilian Journal of Political Economy, Vol 33, Iss 3, Pp 371-387 (2013)
Verlag/Hrsg.: Editora 34
Schlagwörter: Dutch disease / exchange rate / value / market price / Economics as a science / HB71-74
Sprache: Englisch
Portuguese
Permalink: https://search.fid-benelux.de/Record/base-27021164
Datenquelle: BASE; Originalkatalog
Powered By: BASE
Link(s) : https://doi.org/10.1590/S0101-31572013000300001

This paper revisits the original (2008) paper on the Dutch disease, which defined it by the existence of two exchange rate equilibriums (the current and the industrial exchange rate equilibriums). Its novelty is in claiming that, as we have a value and a market price for each good or service, we also have a value and a market price for foreign money. The value is the cost plus reasonable profit corresponding to the exchange rate that makes competitive the country's competent business enterprises; the nominal exchange rates floats around the value according to the demand and supply of foreign money. This basic distinction of the exchange rate in terms of value and in terms of price allows us to understand that the two equilibriums are defined in value terms, and opens room for a clear distinction of the policies that affect the value from the ones that affect the market price of the exchange rate.