The Dutch disease in reverse: Iceland's natural experiment
Abundant natural resources brought Iceland a systemically overvalued currency, with adverse effects on the secondary tradable sector. During 2003-2008 another national treasure, the sovereign's AAA rating, was used to attract foreign capital, elevating the real exchange rate even further. The financial collapse in 2008 left the country with a large foreign debt without the possibility of rollovers in international capital markets. This offset some of the effect of the natural resources on the real exchange rate; in effect, this was the Dutch disease in reverse as witnessed, in particular, by a... Mehr ...
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Dokumenttyp: | Working paper |
Erscheinungsdatum: | 2020 |
Verlag/Hrsg.: |
University of Oxford
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Sprache: | unknown |
Permalink: | https://search.fid-benelux.de/Record/base-27439523 |
Datenquelle: | BASE; Originalkatalog |
Powered By: | BASE |
Link(s) : | https://ora.ox.ac.uk/objects/uuid:292ffa98-285e-4cf7-9a7e-d45d14e12656 |
Abundant natural resources brought Iceland a systemically overvalued currency, with adverse effects on the secondary tradable sector. During 2003-2008 another national treasure, the sovereign's AAA rating, was used to attract foreign capital, elevating the real exchange rate even further. The financial collapse in 2008 left the country with a large foreign debt without the possibility of rollovers in international capital markets. This offset some of the effect of the natural resources on the real exchange rate; in effect, this was the Dutch disease in reverse as witnessed, in particular, by a massive increase in the number of tourists in recent years.