CEPR: park cash in foreign assets to ease effects of foreign exchange windfall
A Centre for Economic Policy Research paper published on Monday says a foreign exchange windfall associated with discovery of a natural resource, a commodity boom, or an increase in aid or remittances is best dealt with by parking some of the gains in foreign assets while absorption problems are being ironed out.
The theory of the Dutch disease suggests an increase of inflows or foreign aid will cause an appreciation in the domestic exchange rate, resulting in the country's exports becoming more
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