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

Majumder, MK, Raghavan, MV ORCID: 0000-0002-4123-5004 and Vespignani, JL ORCID: 0000-0003-0265-4377 2021 , 'Impact of commodity price volatility on external debt: the role of exchange rate regimes' , Applied Economics , pp. 1-15 , doi: 10.1080/00036846.2021.1947960.

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Abstract

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.

Item Type: Article
Authors/Creators:Majumder, MK and Raghavan, MV and Vespignani, JL
Keywords: commodity price volatility, external debt, exchange rate regimes, commodity-exporting countries
Journal or Publication Title: Applied Economics
Publisher: Routledge Taylor & Francis Ltd
ISSN: 0003-6846
DOI / ID Number: 10.1080/00036846.2021.1947960
Copyright Information:

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

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