Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/167499
Authors: 
Gylfason, Thorvaldur
Zoega, Gylfi
Year of Publication: 
2017
Series/Report no.: 
CESifo Working Paper 6513
Abstract: 
For a long time, abundant natural resources brought Iceland a high and volatile real exchange rate with adverse effects on manufacturing and services. During 2003-2008, another national treasure, the sovereign’s AAA rating, was used by privatized banks to attract foreign capital, elevating the real exchange rate even further. The financial collapse and the associated collapse of the currency in 2008 left the country with a large foreign debt which offset some of the effect of the natural resources on the real exchange rate. In effect, this was the Dutch disease in reverse as witnessed, in particular, by a massive increase in the number of tourists following the financial collapse. This paper discusses the behavior of the exchange rate of the Icelandic króna before and after 2008 as well as its relationship to natural resources, capital flows, output, exports and imports, including tourism.
Subjects: 
natural resource curse
Dutch disease
financial crisis
JEL: 
F41
O23
O33
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.