TY - BOOK ID - 84542872 TI - Commodity Price Cycles : The Perils of Mismanaging the Boom AU - Sosa, Sebastian. AU - Adler, Gustavo. PY - 2011 SN - 1463993439 1463940300 1283569957 9786613882400 1463937679 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Prices KW - Terms of trade KW - Competition, International KW - Commercial products KW - Commodity prices KW - Justum pretium KW - Price theory KW - Consumption (Economics) KW - Cost KW - Costs, Industrial KW - Money KW - Cost and standard of living KW - Supply and demand KW - Value KW - Wages KW - Willingness to pay KW - Investments: Commodities KW - Exports and Imports KW - Foreign Exchange KW - Macroeconomics KW - Business Fluctuations KW - Cycles KW - Studies of Particular Policy Episodes KW - Trade: General KW - Macroeconomic Aspects of International Trade and Finance: General KW - Agricultural and Natural Resource Economics KW - Environmental and Ecological Economics: General KW - Commodity Markets KW - Empirical Studies of Trade KW - International economics KW - Investment & securities KW - Currency KW - Foreign exchange KW - Commodities KW - Exports KW - Exchange rate flexibility KW - International trade KW - Economic policy KW - nternational cooperation KW - United States UR - https://www.unicat.be/uniCat?func=search&query=sysid:84542872 AB - Commodity-exporting countries have significantly benefited from the commodity price boom of recent years. At the current juncture, however, uncertain global economic prospects have raised questions about their vulnerability to a sharp fall in commodity prices and the policies that can shield it from such a shock. To address these questions, this paper takes a long term (4 decade) view at emerging markets' commodity dependence, the history of commodity price busts and the role of policies in mitigating or amplifying their economic impact. The paper highlights the stark difference in trends between Latin America - one of the most vulnerable regions given its high, and rising, commodity dependence - and emerging Asia - which has evolved from being a net exporter to a net importer of commodities in the last 40 years. We find evidence, however, that while commodity dependence is an important ingredient, a country's ultimate degree of vulnerability to commodity price shocks is to a great extent determined by the flexibility and quality of its policy framework. Policies in the run-up of sharp terms-of-trade drops - especially when those are preceded by booms - play a particularly important role. Limited exchange rate flexibility, a weak external position, and loose fiscal policy tend to amplify the negative effects of these shocks on domestic output. Financial dollarization also appears to act as a shock "amplifier.". ER -