Examinando por Materia "Balance of Payments Crisis"

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    Bolivia's Balance of Payments Crisis : From Boom to Bust
    (Universidad EAFIT, 2024) Gutiérrez Ramírez, Isabella; Goda, Thomas
    This article investigates Bolivia’s current balance of payments crisis, identifying its principal causes and broader economic implications. The study focuses on key factors, such as the decline in natural gas exports, elevated government spending, and the fixed exchange rate regime. These factors and sustained current account deficits have increasingly exposed the Bolivian economy to external vulnerabilities. Utilizing an Autoregressive Distributed Lag (ARDL) model, the research assesses both short- and long-term relationships between Bolivia’s balance of payments and macroeconomic variables, such as the Real Effective Exchange Rate, the Volume of Natural Gas Exports, Government Spending, and the GDP Growth of Bolivia’s trading partners. The results indicate that the fixed exchange rate policy has created imbalances by distorting the Real Effective Exchange Rate. Additionally, the government’s heavy reliance on hydrocarbons has made fiscal policy less effective in maintaining economic balance. The findings emphasize the need for structural reforms, including revisiting the exchange rate policy, diversifying export sources, and improving fiscal management to mitigate future vulnerabilities. This research offers valuable insights into Bolivia’s economic challenges and provides a framework for understanding the broader consequences of heavily relying on natural resources within a globalized economy.