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Abstract

This study explores the impact of commodity price volatility on external debt accumulation under fixed, managed, and floating 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.

Item Type:	Report (Discussion Paper)
Authors/Creators:	Majumder, MK and Raghavan, M and Vespignani, JL
Keywords:	Commodity price volatility, external debt, commodity-exporting countries, exchange rate regime
Publisher:	University of Tasmania
Copyright Information:	Copyright 2020 University of Tasmania
Additional Information:	Discussion Paper Series N 2020-13 JEL Classification Numbers: E62, F31, F34, G01
Item Statistics:	View statistics for this item

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