In an oil exporting developing country the issue of how to stabilise the domestic economy from oil market volatilities has been a big concern for both scholars and policy makers during the last two decades. Modelling the behaviour of key arguments involved in the transmission mechanism of oil revenues into the domestic economy is a necessary introduction to dealing with this problem. On the specification point of view, previous empirical works in this area show little concern over a process that takes the variables back to their steady state positions. This leaves long run equilibrium values of the variables involved in this processes undefined. This thesis attempts to provide a careful analysis with empirical evidence of the issue of the macroeconomic effects of oil revenue fluctuations on key economic variables such as domestic and foreign prices, money demand equation, exchange rates and nonoil gdp growth set in a Dutch Disease framework for the Iranian economy during 1960-1990 period. The analysis, using annual data, employs modern econometric techniques (such as cointegration and error correction) to examine dynamics (short run) and static (long run) components of:these variables in connection with oil revenue fluctuations. Two modified versions of the Purchasing Power Parity and conventional money demand relationships are used to model black market exchange rate and monetary aspects of oil revenue changes, respectively. To model domestic price movements, we experiment with 2 long run equilibrium positions, inverted money demand function and reversed PPP relationship. PPP appears as a valid model of the long run black market exchange rate and domestic prices determination. We also find strong supportive evidence for conventional model of real money balances. The main conclusions are: increases in oil revenue (i) depress black market exchange rate asymmetrically; (ii) suppress domestic inflation directly and then pull it up indirectly through higher foreign inflation and a more depressed exchange rate; (iii) have a contractionary effect on non-oil real gdp growth; and (iv) change real money balances with a small elasticity.

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The subject of this study is the influence of favourable exogenous shocks on the structure of prices and output composition in small open economies. The study is based, theoretically, on the Dutch Disease theory; and, empirically, on research conducted on Jordan. Under general equilibrium conditions, a boom in a traded sector is likely to produce a contraction of output and employment in non-booming traded sectors - de-industrialisation. This is the essence of the Dutch disease theory, its conclusions valid only within its particular set of assumptions about factor-market underpinnings of the model, including macro-equilibrium and full employment, fixed national stock of labour and capital, and perfect capital markets; and unchanging technical conditions of production. Furthermore, changes in the structure of demand that underlie the process of industrialisation are ignored, as the model assumes growth, other than that generated by the windfall gain, away. The present study contests this analytical approach, and offers an alternative that considers initial conditions of disequilibrium and conducts dynamic analysis to show the effects of demand expansion, with its disproportionately large stimulus to manufacturing, on these conditions. Demand-led output growth combined with supply-side changes induced by booming conditions leads to rapid productivity growth in manufacturing, by both increasing production efficiency and inducing technological advance. The outcome of these inter-linked supply-demand changes is an acceleration of industrialisation. The study thus presents an antithesis to the Dutch disease hypothesis. After an overview of the Dutch disease theory, the study discusses the necessary modifications when certain characteristics of industrialising economies are taken into consideration. The focus of the analysis is the Dutch disease theory's assumptions, its level of abstraction, and the static nature of its analysis. Various countries' experience of booms are presented to show that the outcome of sectoral shifts is crucially dependent on the pre-boom economic conditions; and thus to show also that boom experiences of industrial and industrialising economies differ considerably. The discussion of Jordan starts by outlining that country's historical experience of sectoral shifts. The counterfactual to the Dutch disease is established with the aid of trend analysis, and it is shown that at the end of the boom, the share in aggregate output of agriculture was smaller, and that of manufacturing larger, than 'expected' from historical trends. Dutch disease analysis is used to show that resource mobility and the spending effect have induced currency appreciation, as would have been predicted by the theory. Contrary to the theory's predictions, however, the examination of the commodity trade balance reveals significant growth in agricultural and manufacturing exports during the boom. The study then examines the reasons behind the discrepancy between the theory and this empirical observation. The performance of agriculture and manufacturing are examined separately. In both sectors booming conditions brought about rapid technological advance which expanded profits in these sectors. In addition, the disproportionately large demand for manufactured goods, both for consumption and investment, led to a rapid expansion of this sector's share in aggregate output; which was compensated for by a decline in that of agriculture. Seen in this light, the decline in the share of agriculture was a manifestation of successful industrialisation, rather than the Dutch disease effect.

The dissertation consists of three essays on Dutch Disease and exchange rate pass-through. Dutch Disease refers to the adverse effects of the natural resource booms on the tradable sectors (manufacturing industries) which may occur mainly through the subsequent appreciation of the real exchange rate.<p> The first essay aims to investigate whether Canadian manufacturing industries have experienced Dutch Disease over the period 1992-2007 as a result of the oil boom. After a review of the literature and discussion of the theoretical considerations, the paper presents a two part empirical analysis to estimate the short- and long-run Dutch Disease effects for the Canadian manufacturing industries at three, four and few cases of five-digit levels of NAICS (about 80 industries), using quarterly data. The first part of the empirical analysis estimates the relationship between real exchange rate and energy prices as well as the other related factors and the second part estimates the effect of real exchange rate on output of the manufacturing industries. Based on these two estimated relationships, the Dutch Disease effect is derived by calculating the effect of energy prices on output of the manufacturing industries. The results indicate that the direction and magnitude of the Dutch Disease effect varies substantially across industries likely, as theory explains, because of differences in market structure in terms of the market power. Specifically, 53 out of the 80 industries suffer from the Dutch Disease with the elasticity of -0.18 in average, while Dutch Disease is beneficial for 24 industries with the elasticity of 0.21 in average. The simulation results reveal that, among the industries suffering (benefiting) from the Dutch Disease, each industry could have more annual output growth by 0.93 (-1.07) percent in average if energy prices remained at its level in 1992. This simulated value for the whole sample is 0.30 percent which is significant compared to 2.8 percent as the average of annual industrial production growth during 1992-2007.<p> The second and third essays together aim to model and estimate the degree of exchange rate pass-through into Canadian producer prices in manufacturing industries. The second essay, as a theoretical one, presents a literature review and contributes to the literature by developing a relatively more general theoretical framework. The provided model, which extends Yangs model (1997) by incorporating the role of the tradable inputs, is able to show all the major determinants of exchange rate pass-through together, while the previous studies have only analyzed the role of one or some of these factors. Specifically, the theoretical model indicates that the exchange rate pass-through should be between one and zero, while it is positively affected by the share of tradable inputs in total cost, and the domestic firms' market share and negatively by the elasticity of marginal cost with respect to output. The sign for the degree of substitutability among the variants is not theoretically clear and remains as an empirical question.<p> Finally, the third essay presents the empirical framework for estimation of the exchange rate pass-through and its determinants in Canadian manufacturing industries. In this essay, the short- and long-run exchange rate pass-through elasticities to the domestic producer prices are estimated for the industries at three, four and few cases of five-digit levels of NAICS (about 100 industries), using quarterly data from 1992-2007. Then, the pass-through variation across industries is explained by regressing the estimated pass-through elasticities on the variables that are hypothesized to affect the pass-through elasticities according to the developed theoretical model. The results indicate that incomplete pass-through is observed in most cases although its magnitude is different across industries. The average short- and long-run pass-through elasticities are 0.24 and 0.36 respectively. The share of intermediate materials, as the tradable inputs, in production costs (with positive effect) and the elasticity of marginal cost with respect to output (with negative effect) are the most important determinants of the exchange rate pass-through across industries.

The dissertation consists of three essays on Dutch Disease and exchange rate pass-through. Dutch Disease refers to the adverse effects of the natural resource booms on the tradable sectors (manufacturing industries) which may occur mainly through the subsequent appreciation of the real exchange rate.<p> The first essay aims to investigate whether Canadian manufacturing industries have experienced Dutch Disease over the period 1992-2007 as a result of the oil boom. After a review of the literature and discussion of the theoretical considerations, the paper presents a two part empirical analysis to estimate the short- and long-run Dutch Disease effects for the Canadian manufacturing industries at three, four and few cases of five-digit levels of NAICS (about 80 industries), using quarterly data. The first part of the empirical analysis estimates the relationship between real exchange rate and energy prices as well as the other related factors and the second part estimates the effect of real exchange rate on output of the manufacturing industries. Based on these two estimated relationships, the Dutch Disease effect is derived by calculating the effect of energy prices on output of the manufacturing industries. The results indicate that the direction and magnitude of the Dutch Disease effect varies substantially across industries likely, as theory explains, because of differences in market structure in terms of the market power. Specifically, 53 out of the 80 industries suffer from the Dutch Disease with the elasticity of -0.18 in average, while Dutch Disease is beneficial for 24 industries with the elasticity of 0.21 in average. The simulation results reveal that, among the industries suffering (benefiting) from the Dutch Disease, each industry could have more annual output growth by 0.93 (-1.07) percent in average if energy prices remained at its level in 1992. This simulated value for the whole sample is 0.30 percent which is significant compared to 2.8 percent as the average of annual industrial production growth during 1992-2007.<p> The second and third essays together aim to model and estimate the degree of exchange rate pass-through into Canadian producer prices in manufacturing industries. The second essay, as a theoretical one, presents a literature review and contributes to the literature by developing a relatively more general theoretical framework. The provided model, which extends Yangs model (1997) by incorporating the role of the tradable inputs, is able to show all the major determinants of exchange rate pass-through together, while the previous studies have only analyzed the role of one or some of these factors. Specifically, the theoretical model indicates that the exchange rate pass-through should be between one and zero, while it is positively affected by the share of tradable inputs in total cost, and the domestic firms' market share and negatively by the elasticity of marginal cost with respect to output. The sign for the degree of substitutability among the variants is not theoretically clear and remains as an empirical question.<p> Finally, the third essay presents the empirical framework for estimation of the exchange rate pass-through and its determinants in Canadian manufacturing industries. In this essay, the short- and long-run exchange rate pass-through elasticities to the domestic producer prices are estimated for the industries at three, four and few cases of five-digit levels of NAICS (about 100 industries), using quarterly data from 1992-2007. Then, the pass-through variation across industries is explained by regressing the estimated pass-through elasticities on the variables that are hypothesized to affect the pass-through elasticities according to the developed theoretical model. The results indicate that incomplete pass-through is observed in most cases although its magnitude is different across industries. The average short- and long-run pass-through elasticities are 0.24 and 0.36 respectively. The share of intermediate materials, as the tradable inputs, in production costs (with positive effect) and the elasticity of marginal cost with respect to output (with negative effect) are the most important determinants of the exchange rate pass-through across industries.

The resource curse literature predicts how both aid and natural resources leads to real appreciation, hurting competitiveness and disfavoring the producing sector, which is bad news for a nation at the outset of its industrial buildup. Furthermore, a resource boom might lead to undesired behavior undermining national institutions – bearing implications of a “double resource curse”. Mozambique is an aid-dependent nation now facing the outbreak of a resource boom, as recent natural gas discoveries bring potential for transforming one of the world’s poorest countries to one of the world’s largest natural gas exporters within decades. The literature provides us with expectations of such successful transformation being dependent on both sound economic and institutional development. This study aims to uncover whether there are symptoms of Dutch Disease in the Mozambican economy, by tracking real appreciation through calculating effective exchange rate indices for the time period of 2002-2012 as well as analyzing sectoral development over the same time span. In continuation, we track institutional development in Mozambique with time-series data of institutional indicators developed by the World Bank. We find that institutions are weak and we observe signs of deterioration coupled with massive gas discoveries in recent years. The national economy is growing, and we cannot find signs of large shifts in sector development. However, the real exchange rate has appreciated in recent years. While the cause of this is not explained by our deployed literature, we find it interesting that fluctuations in foreign direct investments shows signs of correlation with the real exchange rate. The impact of FDI on developing economies will serve a potent variable for further research within resource curse frameworks.

Univ., Diss.--Bern, 2004.

Submitted by Stéfany Moreira (stemellra@yahoo.com.br) on 2013-02-25T12:50:48Z No. of bitstreams: 1 DISSERTAÇÃO_BoomMinérioFerro.pdf: 1248098 bytes, checksum: 154f44bebbbdd1178515244a1b1e4890 (MD5) / Approved for entry into archive by Neide Nativa (neide@sisbin.ufop.br) on 2013-02-25T14:06:39Z (GMT) No. of bitstreams: 1 DISSERTAÇÃO_BoomMinérioFerro.pdf: 1248098 bytes, checksum: 154f44bebbbdd1178515244a1b1e4890 (MD5) / Made available in DSpace on 2013-02-25T14:06:39Z (GMT). No. of bitstreams: 1 DISSERTAÇÃO_BoomMinérioFerro.pdf: 1248098 bytes, checksum: 154f44bebbbdd1178515244a1b1e4890 (MD5) Previous issue date: 2009 / A economia do Brasil e de alguns países em desenvolvimento é fortemente influenciada pela indústria de exploração de recursos naturais, como a extração mineral, a agricultura e a pecuária. Em economias com estas características a ocorrência da falha de mercado nomeada como Dutch disease 1 (DD) é em determinadas circunstâncias especulada. Assim, a comprovação da hipótese da existência desta “moléstia” em território brasileiro, provocada pelo boom do minério de ferro, é o principal objetivo deste trabalho. A revisão bibliográfica sobre o caso pragmático holandês se deu através do estudo da bibliografia científica existente sobre a DD na Holanda. Estudos referentes à desindustrialização da economia e neutralização desta falha de mercado foram realizados para uma melhor compreensão do tema. O referencial teórico foi completado com a apresentação de teorias sobre as principais determinantes de uma taxa de câmbio, durante o regime de Bretton Woods e durante os oito anos da série histórica definida para análise (2000-2007). Esta dissertação apresenta, compara, analisa e debate dados referentes à Holanda para eliminar dúvidas sobre a existência da falha de mercado DD. Posteriormente dados sobre a economia brasileira, principalmente do balanço de pagamentos, flutuação do câmbio e cotação e quantidades exportadas do minério de ferro foram coletados. A análise destes dados teve o intuito de verificar o impacto do boom mineral brasileiro no processo de commoditização da pauta exportadora nacional, assim como na valorização do Real no período. Esta análise se propôs a eliminar dúvidas sobre a existência da falha de mercado DD provocada pelo boom do minério de ferro, reprovando assim sua existência no país através desta commodity. Em sua última parte foi feita uma comparação entre o contexto econômico quando se deu a doença holandesa e o atual vivido no Brasil, demonstrando, baseado nas teorias que dissertam sobre o mercado financeiro, os motivos pelos quais atualmente esta falha de mercado tem menores possibilidades de ocorrer. O trabalho não endossa a linha de pesquisa que disserta sobre ocultos entraves para a diversificação da indústria nacional e aceleração do crescimento econômico brasileiro. Por outro lado confere responsabilidade à complexidade do sistema financeiro mundial, ao aprofundamento e sofisticação do sistema financeiro brasileiro, e diversificação da pauta exportadora brasileira para afirmar por que os efeitos negativos da doença holandesa não são pertinentes no país. ____________________________________________________________________________________________________ / ABSTRACT: The economy of Brazil and some developing countries is strongly influenced by the industry of natural resources exploitation, such as mining, agriculture and livestock. In economies with these characteristics the occurrence of market failure appointed as Dutch disease (DD) is speculated in certain circumstances. Thus, the proof of the hypothesis of the existence of this "disease" in Brazilian territory, caused by the boom of the iron ore production, is the main objective of this work. The literature review on the Dutch classic case was through the study of literature exists on the DD in the Netherlands. Studies concerning the industrialization of the economy and neutralization of this market failure have been conducted to better understand the issue. The theoretical framework was completed with the presentation of theories about the main determinants of exchange rate during the Bretton Woods regime and during the eight years of the series set for analysis (2000-2007). This study presents, compares, analyzes and discusses data on the Netherlands to remove doubts about the existence of the DD market failure. Subsequent data on the Brazilian economy, especially the Balance of Payments, fluctuation of exchange rates, export prices and also the quantities of iron ore were collected. The analysis of these data had the objective of verifying the impact of the mineral boom in the Brazilian commoditization of national exports as well as the optimization of Real in the period. This analysis is proposed to eliminate doubts on the existence of the DD market failure caused by the boom of iron ore production and exports, rejecting its existence in the country through this commodity. In its last part a comparison between the economic context when the Dutch disease happened and the possible occurring in Brazil was done showing, based on theories that discourse on the financial market, the reasons that a market failure as DD has currently fewer possibilities to occur. The work does not endorse the line of research that discourse on hidden barriers to diversification of the domestic industry and acceleration of economic growth in Brazil. On the other hand it gives responsibility to the complexity of the global financial system, the depth and sophistication of the Brazilian financial system, and also the diversification of the Brazilian exports to affirm that the negative effects of Dutch disease are not relevant in the country.

This master thesis aims to present the phenomenon of the Duthc disease. The thesis consist of theoretical and analytical part.

This essay examines the impact of the phenomenon of Dutch Disease on the agriculture sector in Nigeria since the beginning of the 1980s. Dutch Disease is a misfortune that generally affects resource-rich countries due to exploiting and exporting their natural resources. Dutch Disease seems more widespread in developing countries, such as Sub-Saharan African nations, where natural resources make up a more significant portion of total revenues. In Nigeria, the agriculture sector has long been a substantial contributor to the country's development and employs a large share of the workforce; therefore, the presence of Dutch Disease could have substantial implications for the economy. To examine if Nigeria has suffered from Dutch Disease, annual time series data, mainly from the World Bank, were analyzed using the Engle-Granger Co-integration test and Error Correction Model to investigate the long-run and short-run relationships between the agriculture sector and several macroeconomic variables. The empirical results showed that Dutch Disease has been present in Nigeria and that the over-reliance on natural resources harms the agriculture sector. This essay highlights that further research is needed to understand the role of agriculture in Nigeria's growth and potential policy interventions. Further, it emphasizes the importance of effective management of natural resource revenues and the consideration of a sovereign wealth fund to secure oil revenues for coming generations and buffer against price fluctuations. These strategies may mitigate Dutch Disease impacts and foster sustainable economic growth.