TY  - JOUR
AU  - Edwards,Sebastian
TI  - Commodity Export Prices and the Real Exchange Rate in Developing Countries:  Coffee in Colombia
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1570
PY  - 1987
Y2  - May 1987
UR  - http://www.nber.org/papers/w1570
L1  - http://www.nber.org/papers/w1570.pdf
N1  - Author contact info:
Sebastian Edwards
UCLA Anderson Graduate School of Business
110 Westwood Plaza, Suite C508
Box 951481
Los Angeles, CA 90095-1481
Tel: 310/206-6797
Fax: 310/206-5825
E-Mail: sebastian.edwards@anderson.ucla.edu
M1  - published as Sebastian Edwards. "Commodity Export Prices and the Real Exchange Rate in Developing Countries: Coffee in Colombia ," in Sebastian Edwards and Liaquat Ahamed, eds., "Economic Adjustment and Exchange Rates in Developing Countries" University of Chicago Press (1986)

AB  - In this paper a model that analyzes the interaction between changes in commodity export prices, money creation, inflation, and the real exchange rate in a developing country is developed. The model is then tested using data for Colombia. A number of experts have argued that the fluctuations of Colombia's real exchange rate have been mainly determined by world coffee price changes, with more observers emphasizing the consequences of coffee price changes on money creation and inflation. The results obtained indicate that coffee price changes have indeed been closely related to money creation and inflation. Also, coffee price changes have been negatively related to the rate of devaluation of the crawling peg. These results indicate that in Colombia, the real appreciation resulting from coffee price increases has been accommodated, partially by money creation and partially by an adjustment in the nominal exchange rate.
ER  -