Exports, exchange rate and Dutch disease: the Peruvian case

We evaluate the possibility that the Peruvian economy is undergoing a process of Dutch disease that adversely affects exports not subject to a boom. The paper begins with a description of that syndrome. Then it analyzes the evolution of traditional exports, non-traditional and real exchange rate during 1950-2009. This section shows the results of diverse models to explain the sharp drop of the real exchange rate. Subsequently, we develop a model that would determine the minimum rate at which the main companies would be willing to export. The exports that might lose market shares lie in the interaction between this minimum exchange rate and the market exchange rate. Finally, we propose a set of policies to tackle the problem.