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This paper evaluates how successful is a policy of exchange rate stabilization to counteract the negative effects of a Dutch Disease episode. We consider a small open economy model that incorporates nominal rigidities and a learning-by-doing externality in the tradable sector. The paper shows that leaning against an appreciated exchange rate can prevent an inefficient loss of tradable output but at the cost of generating a misallocation of resources in other sectors of the economy. The paper also finds that welfare is a decreasing function of exchange rate intervention. These results suggest that stabilizing the nominal exchange rate in response to a Dutch Disease episode is highly distortionary.

Foreign exchange rates --- Monetary policy --- International finance --- Econometric models. --- International monetary system --- International money --- Finance --- International economic relations --- Foreign Exchange --- Macroeconomics --- Economic Theory --- Resource Booms --- Macroeconomics: Consumption --- Saving --- Wealth --- Commodity Markets --- Currency --- Foreign exchange --- Economic theory & philosophy --- Exchange rates --- Real exchange rates --- Dutch disease --- Consumption --- Commodity prices --- Economic forecasting --- Economics --- Prices --- Canada

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Despite losing global market share over the last 20 years, Uganda remains a major coffee producer, accounting for approximately 2.5 percent of global coffee production. In 2008-2009, coffee exports accounted for almost a quarter of Uganda's formal export earnings and were estimated to generate income and employment for up to 1.3 million Ugandan households. As such, the coffee industry is extremely important to both the rural population and the Ugandan economy. However, the sector exhibits significant levels of production volatility, caused in part by unmanaged risks. Despite the occurrence of numerous risks, the sector has always managed to produce significant, albeit variable, volumes of coffee for export, but the historic resilience of the sector does not automatically imply that the industry will avoid longer-term decline if it fails to proactively manage potential risks going forward. The government of Uganda and the Uganda Coffee Development Authority (UCDA) has already implemented a number of initiatives and programs to mitigate some of the above-mentioned risks. However, many of the existing initiatives need to be strengthened, and some new activities added, to ensure insofar as possible the comprehensive management of all key risks facing the coffee supply chain. An in-depth evaluation of individual solutions was beyond the scope of this exercise; an exhaustive listing of potential risk management solutions, and an assessment of the cost-benefit ratio of different risk management options, needs to be undertaken by the government of Uganda and UCDA.

Access to Markets --- Accounting --- Agriculture --- Agriculture & Farming Systems --- Bananas --- Beans --- Cocoa --- Coffee --- Collateral --- Cooperatives --- Cotton --- Crop Insurance --- Crops & Crop Management Systems --- Dutch Disease --- Economics --- Economies of Scale --- Employment --- Export Competitiveness --- Exporters --- Fair Trade --- Farming --- Interest Rates --- Labor Policies --- Liberalization --- Maize --- Marketing --- Monetary Policy --- Price Volatility --- Productivity --- Risk Management --- Social Protections and Labor --- Sugar --- Technical Assistance --- Uncertainty --- World Development Indicators

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The hydrocarbons sector has become one of the most dynamic economic activities in the Bolivian economy and the main driver of improved export performance and international reserve accumulation. The central role of the hydrocarbons sector in the economy is attributable to the high levels of investment made in the late 1990s, which permitted much higher production levels, particularly of natural gas. However those positive developments in the hydrocarbons sector have given rise to the possibility of a new case of "Dutch disease." While Bolivia's economy has already seen many benefits from its higher gas exports, especially in terms of lower external vulnerability and improved fiscal stance, the new resources could also limit the development of other economic sectors in terms of output and factor income. This paper explores the transmission channels of Dutch disease, as well as its main symptom, the appreciation of the real exchange rate.

Hydrocarbons --- Foreign exchange rates --- Economic aspects --- Bolivia --- Economic conditions. --- Exchange rates --- Fixed exchange rates --- Flexible exchange rates --- Floating exchange rates --- Fluctuating exchange rates --- Foreign exchange --- Rates of exchange --- Rates --- Organic compounds --- Exports and Imports --- Foreign Exchange --- Economic Theory --- Industries: Energy --- Trade: General --- Hydrocarbon Resources --- Resource Booms --- Currency --- International economics --- Petroleum, oil & gas industries --- Economic theory & philosophy --- Real exchange rates --- Exports --- Natural gas sector --- Dutch disease --- Real effective exchange rates --- Gas industry --- Economic forecasting

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This paper demonstrates that the Dutch disease need not materialize in low-income countries that can draw on their idle productive capacity to satisfy the aid-induced increased demand. Diagnoses on, and prognoses for, the Dutch disease should take into account country-specific circumstances to avoid ill-advised policies. The paper emphasizes that using public resources inefficiently can be more painful than real exchange rate appreciations, which may not necessarily embody the Dutch disease.

Economic assistance --- Poverty --- Foreign exchange rates --- Exports and Imports --- Labor --- Economic Theory --- Foreign Aid --- Economic Growth of Open Economies --- Welfare, Well-Being, and Poverty: General --- Economic Growth and Aggregate Productivity: General --- Resource Booms --- Trade: General --- Empirical Studies of Trade --- Human Capital --- Skills --- Occupational Choice --- Labor Productivity --- Economic theory & philosophy --- International economics --- Labour --- income economics --- Dutch disease --- Aid flows --- Exports --- Trade balance --- Human capital --- Economic theory --- Foreign aid --- International trade --- Economic forecasting --- Balance of trade --- Tanzania, United Republic of

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The petroleum-rich former Soviet republics around the Caspian Sea face the dual challenge of managing the transition to a market economy and a booming resource sector. This paper examines this challenge with particular reference to Azerbaijan. The standard “Dutch disease” model is modified to capture the special conditions of transition economies, with specific attention to the pattern of real exchange rate movement. “Transition factors” are found to add to the speed of real appreciation. Non-oil sectors may suffer, but less through the real appreciation than through transition-specific structural problems. The paper describes a medium-term policy strategy for Azerbaijan, relating its prospects to the experience in the 1970s of Ecuador, Indonesia, and Nigeria. The adverse effects of the Dutch disease may be avoided if Azerbaijan pursues policies to promote savings and open trade, and strengthens the supply side through structural policies.

Investments: Energy --- Foreign Exchange --- Economic Theory --- Natural Resources --- Economic Growth of Open Economies --- Resource Booms --- Energy and the Macroeconomy --- Energy: General --- Agricultural and Natural Resource Economics --- Environmental and Ecological Economics: General --- Commodity Markets --- Investment & securities --- Environmental management --- Currency --- Foreign exchange --- Economic theory & philosophy --- Oil --- Natural resources --- Real exchange rates --- Commodity booms --- Dutch disease --- Commodities --- Environment --- Economic theory --- Petroleum industry and trade --- Commercial products --- Economic forecasting --- Azerbaijan, Republic of