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Impact of commodity price volatility on external debt: the role of exchange rate regimes

journal contribution
posted on 2023-05-21, 01:02 authored by Majumder, MK, Mala RaghavanMala Raghavan, Joaquin VespignaniJoaquin Vespignani
This study explores the impact of commodity price volatility on external debt accumulation under fixed, managed, and floating exchange rate regimes. We estimate dynamic panel data models for 97 countries from 1993 to 2016. Our empirical findings show that commodity price volatility increases external debt accumulation for commodity-exporting countries. This impact is three-times higher for countries with fixed exchange rate regimes compared to managed floating exchange rate regimes. Under floating exchange regimes, the effect of commodity price volatility on external debt is statistically insignificant. Our results suggest that the adoption of a floating exchange rate regime by commodity-exporting countries is critical to mitigate the effects of commodity price volatility on external debt accumulation.

History

Publication title

Applied Economics

Pagination

1-15

ISSN

0003-6846

Department/School

Marketing

Publisher

Routledge Taylor & Francis Ltd

Place of publication

4 Park Square, Milton Park, Abingdon, England, Oxfordshire, Ox14 4Rn

Rights statement

© 2021 Informa UK Limited, trading as Taylor & Francis Group

Repository Status

  • Restricted

Socio-economic Objectives

Macroeconomics not elsewhere classified

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