Exchange Rate Assessment for Oil Exporters

April 1, 2009

Preview Citation

Format: Chicago

Klaus-Stefan Enders. Exchange Rate Assessment for Oil Exporters, (USA: International Monetary Fund, 2009) accessed November 12, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

While the underlying methodologies continue to be widely debated and refined, there is little consensus on how to assess the equilibrium exchange rate of economies dominated by production of finite natural resources such as the oil economies of the Middle East. In part this is due to the importance of intertemporal aspects (as the real exchange rate may affect the optimal/equitable rate of transformation of finite resource wealth into financial assets), as well as risk considerations given the relatively high volatility of commodity prices. The paper illustrates some important peculiarities of the exchange rate assessment for such natural resource producers by working through a simple two-period model that captures certain key aspects of many resource economies.

Subject: Balance of payments, Commodities, Current account, Expenditure, Foreign exchange, Oil, Oil prices, Prices, Real exchange rates

Keywords: Current account, Current account deterioration, Current account improvement, Current account norm, Equilibrium current account, Equilibrium exchange rate, Exchange rate, Global, Goods price, Government spending rise, Oil, Oil export volume, Oil exports, Oil prices, Real exchange rates, Subsidized price, Unsustainable budget, WP

Publication Details

Pages:

21
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2009/081
Stock No:

WPIEA2009081
ISBN:

9781451872286
ISSN:

1018-5941

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