Policy Towards Commodity Shocks in Developing Countries.

Type Book

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Summary

On the basis of a comparative study of 23 episodes involving commodity price shocks we find that both the public and private sectors typically save around half of a windfall gain resulting from a price rise. We argue that private windfalls should be left with the private sector rather than taxed. The focus of policy towards windfalls should be monetary rather than fiscal. The central bank should accommodate aggregate changes in the demand for financial assets. The private sector will initially wish to increase its claims on the central bank as it saves the windfall, but will then reduce them as portfolios are switched into real assets.

Titles

Full Title: Policy Towards Commodity Shocks in Developing Countries.

Series Statement

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Notes

English.

Identifiers

Isbns: 1281311332; 9781281311337; 146234190X; 9781462341900; 1455298948; 9781455298945; 145524838X; 9781455248384; 9786613778529; 6613778524
Issn: 2227-8885
Oclc Number: (OCoLC)817107211

Publication Statement

Publisher: International Monetary Fund
Date: 1996

Physical Description

Extent: 1 online resource (22 pages)

Summary

On the basis of a comparative study of 23 episodes involving commodity price shocks we find that both the public and private sectors typically save around half of a windfall gain resulting from a price rise. We argue that private windfalls should be left with the private sector rather than taxed. The focus of policy towards windfalls should be monetary rather than fiscal. The central bank should accommodate aggregate changes in the demand for financial assets. The private sector will initially wish to increase its claims on the central bank as it saves the windfall, but will then reduce them as portfolios are switched into real assets.