Commodity Export Prices and the Real Exchange Rate in Developing Countries: Coffee in Colombia / Sebastian Edwards.

Format:

Book

Author/Creator:

Edwards, Sebastian.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w1570.

NBER working paper series no. w1570

Language:

English

Subjects (All):

Exports.

Foreign exchange.

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Commodity Export Prices and the Real Exchange Rate in Developing Countries

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1985.

Cambridge, Massachusetts : National Bureau of Economic Research, 1985.

Summary:

In this paper a model that analyzes the interaction between changes in commodity export prices, money creation, inflation, and the real exchange rate in a developing country is developed. The model is then tested using data for Colombia. A number of experts have argued that the fluctuations of Colombia's real exchange rate have been mainly determined by world coffee price changes, with more observers emphasizing the consequences of coffee price changes on money creation and inflation. The results obtained indicate that coffee price changes have indeed been closely related to money creation and inflation. Also, coffee price changes have been negatively related to the rate of devaluation of the crawling peg. These results indicate that in Colombia, the real appreciation resulting from coffee price increases has been accommodated, partially by money creation and partially by an adjustment in the nominal exchange rate.

Notes:

Print version record

February 1985.