Exchange Rate Assessment for Oil Exporters

23 Pages Posted: 28 Apr 2009

See all articles by K. Enders

K. Enders

International Monetary Fund (IMF)

Date Written: April 2009

Abstract

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.

Keywords: Exchange rate assessments, Oil exporting countries, Middle East, Cooperation Council for the Arab States of the Gulf, Oil exports, Private consumption, Private savings, Economic models

Suggested Citation

Enders, Klaus-Stefan, Exchange Rate Assessment for Oil Exporters (April 2009). IMF Working Paper No. 09/81, Available at SSRN: https://ssrn.com/abstract=1394781

Klaus-Stefan Enders (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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