Working papers
Windfalls for all?
International elasticities and Dutch disease in a commodity export economy
January, 2023
Abstract: This paper analyzes the effect of commodity price variations on both overall and sectoral outcomes in a commodity exporting economy. Using Chilean and international copper market data, I find positive copper price changes coming from copper-specific demand shocks generate a broad GDP expansion and no fall in exports across all sectors, including manufacturing. These results provide evidence against the Dutch disease hypothesis related to the crowding out effect of commodity price increases on the manufacturing sector. I then estimate key structural parameters of a small open economy business-cycle model with three sectors and find a low degree of substitution between domestic and foreign goods explains the positive sectoral effect of a commodity price shock. Finally, I evaluate how tariffs on imports shape the effect of commodity price shocks and find low tariffs make the small open economy less sensitive to commodity price shocks when the elasticity of substitution between domestic goods and imports is small.
Work in progress
Access to banking services and effects of oil price shocks in Mexico
Complementarities in conventional and unconventional oil extraction (with Andrés Méndez-Ruiz)