DealingDealing with with the Resourcethe Resource

Curse:Curse:How Can Commodity How Can Commodity

Exporters Reduce Exporters Reduce Procylicality? Procylicality?

Meeting the Next Macroeconomic Challenges in Africa NBER Africa Project and the Central Bank of Tanzania,

Zanzibar, Dec. 18-19, 2012

Jeffrey FrankelHarpel Professor of Capital Formation & Growth, Harvard

Universityand NBER

Many countries that are richly endowed with oil, minerals, or fertile land have failed to grow more rapidly than those without.

Example:

Some studies find a negative effect of Some studies find a negative effect of oil oil in particularin particular, on economic , on economic performance.performance.

What is the Natural Resource Curse?

Meanwhile, East Asian economies achieved western-level standards of living despite having virtually no exportable natural resources:

Japan, Singapore, Hong Kong, Korea &

Taiwan, rocky islands or peninsulas;

followed by China.

44

Growth falls with fuelGrowth falls with fuel && mineral mineral exportsexports

55

Are natural resources Are natural resources necessarilynecessarily bad? bad?

Commodity wealth needCommodity wealth need not necessarily lead not necessarily lead to inferior economic or political development. to inferior economic or political development.

Rather, it is a double-edged sword, Rather, it is a double-edged sword, with both benefits and dangers. with both benefits and dangers. It can be used for ill as easily as for good.It can be used for ill as easily as for good.

The priority should be on identifying ways The priority should be on identifying ways

to sidestep the pitfalls that haveto sidestep the pitfalls that have afflictedafflicted commoditycommodity producers in the past, producers in the past, to find the path of success. to find the path of success.

No, of course not.No, of course not.

66

Some developing countries have avoided Some developing countries have avoided the pitfalls of commodity wealth.the pitfalls of commodity wealth.

E.g., Chile (copper)E.g., Chile (copper)

Botswana (diamonds)Botswana (diamonds)

Some of their innovations are worth Some of their innovations are worth emulating.emulating.

The lecture will suggest some policies & The lecture will suggest some policies & institutional innovations to avoid the curse: institutional innovations to avoid the curse:

especially ways of managing price volatility.especially ways of managing price volatility.

77

The Natural Resource Curse should The Natural Resource Curse should not be interpreted as a rule that not be interpreted as a rule that

commodity-rich countries are commodity-rich countries are doomed to fail.doomed to fail.

The question is what policies to adopt The question is what policies to adopt to avoid the pitfalls and improve the chances of prosperity. to avoid the pitfalls and improve the chances of prosperity.

A wide variety of measures have been A wide variety of measures have been tried by commodity-exporters cope tried by commodity-exporters cope with volatility.with volatility.

Some work better than others.Some work better than others.

88

ProcyclicalityProcyclicality

Commodity-exporting Commodity-exporting developing countries are developing countries are historically pronehistorically prone to to procyclicality,procyclicality,exacerbating the booms& busts.exacerbating the booms& busts.

ProcyclicalityProcyclicality in: in: Capital inflows; Monetary policy;Capital inflows; Monetary policy; Real exchangeReal exchange rate; Non-traded Goodsrate; Non-traded Goods Fiscal PolicyFiscal Policy

99

The procyclicality of fiscal policyThe procyclicality of fiscal policy

A reason for procyclical public A reason for procyclical public spending: spending: receipts from taxesreceipts from taxes && royalties rise in royalties rise in booms.booms.

The government cannot resist The government cannot resist the temptation to increase spending rapidly.the temptation to increase spending rapidly.

Then it is forced to contract in recessions, Then it is forced to contract in recessions, thereby exacerbating the swings. thereby exacerbating the swings.

1010

Two budget items account for much Two budget items account for much

of the spending from oil booms:of the spending from oil booms:

(i) Investment projects.(i) Investment projects. Investment in practice may be Investment in practice may be

“white“white elephant” projects,elephant” projects, which are stranded without funds which are stranded without funds

for completion or maintenance for completion or maintenance when the oil price goes back downwhen the oil price goes back down..

(ii) The government wage bill.(ii) The government wage bill. Windfalls are often spent on public sector Windfalls are often spent on public sector

wages,wages, which are hard to reverse when boom turns to which are hard to reverse when boom turns to

bust. bust.

Rumbi Sithole took this photo in “Bayelsa Statein the Niger Delta,in Nigeria.

The state government received a windfall of money and didn't have the capacity to have it all absorbed in social services so they decided to build a Hilton Hotel. The construction company did a shoddy job, so the tower is leaning to its right and it’s unsalvageable..”

Correlations between Gov.t Spending & GDP1960-1999p

rocyclic

al }

G always used to be pro-cyclical for most developing countries.

countercyclic

al

Adapted from Kaminsky, Reinhart & Vegh (2004)

1212

An important development -- An important development -- in the most recent decade some developing in the most recent decade some developing countries were able to break the historic countries were able to break the historic pattern:pattern:

taking advantage of the boom of 2002-2008taking advantage of the boom of 2002-2008 to run budget surpluses & build reserves,to run budget surpluses & build reserves,

thereby earning the ability to expand thereby earning the ability to expand fiscally in the 2008-09 crisis.fiscally in the 2008-09 crisis.

Chile, Botswana, China, Indonesia, Korea…Chile, Botswana, China, Indonesia, Korea…

How have they done it?How have they done it?

The procyclicality of fiscal policy,The procyclicality of fiscal policy, contcont..

Correlations between Government spending & GDP 2000-2009

In the last decade, about 1/3 developing countries

switched to countercyclical fiscal policy:Negative correlation of G & GDP.

Frankel, Vegh & Vuletin (2012)

procyclic

al

countercyclic

al

Who achieves counter-cyclical fiscal policy?Countries with “good

institutions”

”On Graduation from Fiscal Procyclicality” 2013, Frankel with C.Végh & G.Vuletin; J.Dev.Economics.

Some that are not recommended: Institutions that try to suppress price

volatility.

Those recommended fall into 3 categories:

Devices to hedge risk.

Ideas to reduce macroeconomic procyclicality.

Institutions for better governance.

Policies & institutions to avoidpitfalls of the Natural Resource

Curse

Many of the policies that have Many of the policies that have been intended to suppress been intended to suppress

commodity volatility do not work commodity volatility do not work out so wellout so well

Producer subsidies Stockpiles Marketing boards Price controls Export controls

Blaming derivatives Resource nationalism Nationalization Banning foreign

participation

Devices to share risksDevices to share risks

1.1. Index contracts with foreign Index contracts with foreign companiescompanies(royalties…) to the world commodity (royalties…) to the world commodity price.price.

2.2. Hedge commodity revenues Hedge commodity revenues in options marketsin options markets

3.3. Link debt to the commodity priceLink debt to the commodity price

7 recommendations for commodity-exporting countries

Oct. 2011 op-ed “Barrels & Bonds”

4. Allow some currency appreciation in response 4. Allow some currency appreciation in response to a commodity boom, to a commodity boom, but not a free float. but not a free float.

- Accumulate some forex reserves first.- Accumulate some forex reserves first.- Raise banks’ reserve requirements, esp. on $ liabilities.- Raise banks’ reserve requirements, esp. on $ liabilities.

5. If the monetary anchor is to be Inflation Targeting, 5. If the monetary anchor is to be Inflation Targeting, consider using as the target, in place of the CPI, consider using as the target, in place of the CPI, the GDP deflator, which puts weight the GDP deflator, which puts weight on the export commodity (Pon the export commodity (Productroduct PPricerice TTargetingargeting).).

6. Emulate Chile: to avoid over-spending in boom 6. Emulate Chile: to avoid over-spending in boom times, allow deviations from a target surplus only times, allow deviations from a target surplus only in response to in response to permanentpermanent commodity price rises commodity price rises..

7 recommendations for commodity producers continued

Countercyclical macroeconomic Countercyclical macroeconomic policypolicy

PPT

7. Manage commodity7. Manage commodity funds professionally.funds professionally.

Invest them abroadInvest them abroad like Norway’s Pension Fund,like Norway’s Pension Fund, Reasons:Reasons:

(1) for diversification,(1) for diversification, (2) to avoid cronyism in investments.(2) to avoid cronyism in investments.

butbut insulated from politics insulated from politics like Botswana’s Pula Fund.like Botswana’s Pula Fund. Professionally managed, to optimize financially.Professionally managed, to optimize financially.

7 recommendations for commodity producers, concluded

Good governance Good governance institutionsinstitutions

Elaboration on two proposals to reduce the procyclicality of

macroeconomic policy for commodity exporters

I) To make monetary policy less procyclical: Product Price Targeting

II) To make fiscal policy less procyclical: emulate Chile.

PPT

I) The challenge of designinga monetary regime for countries

where terms of trade shocks dominate the

cycle Fixing the exchange rate leads to procyclical

monetary policy: credit expands in commodity booms.

Floating accommodates terms of trade shocks. But volatility can be excessive; also floating does not provide a nominal anchor.

Inflation Targeting, in terms of the CPI, provides a nominal anchor; but can react perversely to terms of trade shocks.

Needed: an anchor that accommodates trade shocks

Product Price Targeting:Target an index of domestic production

prices [1]

such as the GDP deflator

• Include export commodities in the index and exclude import commodities,

• so money tightens & the currency appreciates when world prices of export commodities rise

• accommodating the terms of trade --• not when world prices of import commodities

rise.

• The CPI does it backwards:• It calls for appreciation when import prices rise,• not when export prices rise !

[1] Frankel (2011, 2012).

PPT

II) Achieving counter-cyclical fiscal II) Achieving counter-cyclical fiscal policypolicy

   

11st st rule – Governments must set a budget target,rule – Governments must set a budget target, set = 0 in 2008 under Pres. Bachelet.set = 0 in 2008 under Pres. Bachelet.    

   

22ndnd rule – The target is structural: rule – The target is structural: Deficits allowed only to the extent thatDeficits allowed only to the extent that (1) output falls short of trend, in a recession, or(1) output falls short of trend, in a recession, or (2) the price of copper is below its trend.(2) the price of copper is below its trend.

33rdrd rule – rule – The trends are projected by 2 panels The trends are projected by 2 panels of independentof independent experts, outside experts, outside thethe political political process.process. Result: Chile avoids the pattern of 32 other Result: Chile avoids the pattern of 32 other

governments, governments, where forecasts in booms are biased toward over-where forecasts in booms are biased toward over-

optimism.optimism. Chile ran surpluses in the 2003-07 boom,Chile ran surpluses in the 2003-07 boom,

while the U.S. & Europe failed to do so.while the U.S. & Europe failed to do so.

The example of Chile since The example of Chile since 20002000

Appendiceson recommendations for

dealing with the natural resource curse

Appendix 1: Policies not recommended

Appendix 2: Elaboration on proposal to make monetary policy less procyclical – PPT, using GDP deflator to set annual inflation target.

Appendix 3: Elaboration on proposal to make fiscal policy less procyclical – emulate Chile, setting structural targets with independent fiscal forecasts

Appendix 1: Appendix 1: Policies that have been Policies that have been

triedtriedbut that are not but that are not recommendedrecommended

Producer subsidies Stockpiles Marketing boards Price controls Export controls

Blaming derivatives Resource nationalism Nationalization Banning foreign

participation

Unsuccessful policies to reduce commodity price Unsuccessful policies to reduce commodity price volatility:volatility:

1) Producer1) Producer subsidies subsidies toto ““stabilizestabilize” ” prices at highprices at high levels, levels, often via wasteful stockpiles & protectionist import often via wasteful stockpiles & protectionist import

barriers.barriers.

Examples:Examples: The EU’s Common Agricultural PolicyThe EU’s Common Agricultural Policy

Bad for EU budgets, economic efficiency, Bad for EU budgets, economic efficiency, international trade & consumer pocketbooks.international trade & consumer pocketbooks.

Or fossil fuel subsidiesOr fossil fuel subsidies which are equally distortionary & budget-busting,which are equally distortionary & budget-busting, and disastrous for the environment as well.and disastrous for the environment as well.

Or US corn-based ethanol subsidies, Or US corn-based ethanol subsidies, with tariffs on Brazilian sugar-based ethanol.with tariffs on Brazilian sugar-based ethanol.

Unsuccessful policies, Unsuccessful policies, continuedcontinued

2) Price controls to “stabilize” prices at low 2) Price controls to “stabilize” prices at low levelslevels Discourage investment & productionDiscourage investment & production..

Example: African countries adopted Example: African countries adopted commodity boards for coffee & cocoa commodity boards for coffee & cocoa at the time of independence. at the time of independence.

The original rationale: to buy the crop in years The original rationale: to buy the crop in years of excess supply and sell in years of excess of excess supply and sell in years of excess demand.demand.

In practice the price paid to cocoa & coffee farmers In practice the price paid to cocoa & coffee farmers

was always below the world price.was always below the world price. As a result, production fell.As a result, production fell.

Microeconomic policies, Microeconomic policies, continuedcontinued

Often the goal of price controls is to shield Often the goal of price controls is to shield consumers of stapleconsumers of staple foodsfoods && fuel from fuel from increasesincreases. .

But the artificially suppressed priceBut the artificially suppressed price discourages domestic supply, anddiscourages domestic supply, and requires rationing to domestic households.requires rationing to domestic households.

Shortages & long lines can fuel political Shortages & long lines can fuel political rage as well as higher prices can.rage as well as higher prices can.

Not to mention when the government Not to mention when the government is forced by huge gaps to raise prices.is forced by huge gaps to raise prices.

Price controls can also require imports, Price controls can also require imports, to satisfy excess demand. to satisfy excess demand.

Then they raise the world price even more.Then they raise the world price even more.

Microeconomic policies, Microeconomic policies, continuedcontinued

3) In producing countries, prices are 3) In producing countries, prices are artificially suppressed by means of artificially suppressed by means of export controls export controls to insulate domestic consumers from a price to insulate domestic consumers from a price

rise. rise. In 2008, India capped rice exports. In 2008, India capped rice exports. Argentina did the same for wheat exports, Argentina did the same for wheat exports, as did Russia in 2010.as did Russia in 2010. India banned cotton exports in March 2012.India banned cotton exports in March 2012.

Results: Results: Domestic supply is discouraged.Domestic supply is discouraged. World prices go even higher.World prices go even higher.

An initiative at the An initiative at the G20 meetings in 2011 G20 meetings in 2011 deserved to succeed:deserved to succeed:

Producers and consuming countries in Producers and consuming countries in grain markets should cooperatively grain markets should cooperatively agree to refrain from export controls and agree to refrain from export controls and price controls.price controls. The result would be The result would be lowerlower world price world price

volatility.volatility.

An initiative that has less merit:

4) Attempts to blame speculation for volatility and so to ban derivatives markets.

Yes, speculative bubbles sometimes hit prices.

But in commodity markets prices are more often the signal for fundamentals.

Don’t shoot the messenger. Also, derivatives are useful for hedgers.

An example of commodity speculation

In the 1955 movie version In the 1955 movie version of of East of EdenEast of Eden, the legendary , the legendary James Dean plays Cal.James Dean plays Cal.   

Like Cain in Genesis, he Like Cain in Genesis, he competes with his brother for competes with his brother for the love of his father. the love of his father.    

Cal “goes long” in the market Cal “goes long” in the market for beans, in anticipation of for beans, in anticipation of a rise in demand if the US a rise in demand if the US enters WWI.enters WWI.  

An example of commodity speculation, cont.

Sure enough, the price of beans goes sky high, Sure enough, the price of beans goes sky high, Cal makes a bundle, and offers it to his father, Cal makes a bundle, and offers it to his father, a moralizing patriarch. a moralizing patriarch. 

But the father is morally offended by Cal’s But the father is morally offended by Cal’s speculation, speculation, not wanting to profit not wanting to profit from others’ misfortunes, from others’ misfortunes, and tells him he will have and tells him he will have to “giveto “give thethe moneymoney back.” back.” 

Cal has been the agent of Cal has been the agent of AdamAdam SmithSmith’’s famous invisibles famous invisible hand: hand: By betting on his hunch about By betting on his hunch about

the future, he has contributed the future, he has contributed to upward pressure on the price to upward pressure on the price of beans in the present, of beans in the present,

thereby increasing the supply so that more thereby increasing the supply so that more is available precisely when needed (by the Army). is available precisely when needed (by the Army). 

The movie even treats us to a scene where Cal The movie even treats us to a scene where Cal watches the beans grow in a farmer’s field, watches the beans grow in a farmer’s field, something real-life speculators seldom get to see.something real-life speculators seldom get to see.

An example of commodity speculation, cont.

The overall lesson for microeconomic policyThe overall lesson for microeconomic policy

Attempts to prevent Attempts to prevent commodity prices from commodity prices from fluctuating generally fail.fluctuating generally fail.

Even though enacted in the name of reducing volatility Even though enacted in the name of reducing volatility & income inequality, their effect is often different.& income inequality, their effect is often different.

Better to accept volatility and cope with it.Better to accept volatility and cope with it.

For the poor: well-designed transfers,For the poor: well-designed transfers, along the lines of Oportunidades or Bolsa Familia.along the lines of Oportunidades or Bolsa Familia.

“Resource nationalism”

Another motive for commodity export controls:

5) To subsidize downstream industries. E.g., “beneficiation” in South African

diamonds But it didn’t make diamond-cutting competitive, and it hurt mining exports.

6) Nationalization of foreign companies. Like price controls,

it discourages investment.

“Resource nationalism” continued

7) Keeping out foreign companies altogether. But often they have the needed technical expertise. Examples: declining oil production in Mexico & Venezuela.

8) Going around “locking up” resource supplies. China must think that this strategy will

protect it in case of a commodity price shock. But global commodity markets are increasingly

integrated. If conflict in the Persian Gulf doubles world oil prices,

the effect will be pretty much the same for those who buy on the spot market and those who have bilateral arrangements.

The overall lesson for The overall lesson for microeconomic policymicroeconomic policy

Attempts to prevent Attempts to prevent commodity prices from commodity prices from fluctuating generally fail.fluctuating generally fail.

Even though enacted Even though enacted in the name of reducing volatility & income in the name of reducing volatility & income inequality, their effect is often different.inequality, their effect is often different.

Better to accept volatility and cope with it.Better to accept volatility and cope with it. For the poor: well-designed transfers,For the poor: well-designed transfers,

along the lines of Oportunidades or Bolsa Familia.along the lines of Oportunidades or Bolsa Familia.

Appendix 2, on Monetary Policy:

Product Price Targeting

Each of the traditional candidates for nominal anchor has an Achilles heel.

The CPI anchor does not accommodate terms of trade changes: IT tightens M & appreciates when import

prices rise not when export prices rise, which is backwards. Targeting core CPI does not much help.

PPT

Professor Jeffrey Frankel

Targeted variable

Vulnerability Example

Gold standard

Price of gold

Vagaries of world gold market

1849 boom; 1873-96 bust

Commodity standard

Price of agric. & mineral

basket

Shocks in imported

commodity

Oil shocks of 1973-80, 2000-11

Monetarist rule M1 Velocity shocks US 1982

Nominal income targeting

Nominal GDP

Measurement problems

Less developed countries

Fixed exchange rate

$ (or €)

Appreciation of $ (or € )

EM currency crises 1995-2001

Inflation targeting CPI

Terms of trade shocks

Oil shocks of 1973-80, 2000-11

6 proposed nominal targets and the Achilles heel of each:Vulnerability

Why is PPT better than a fixed exchange ratefor countries with volatile export prices?

Better response to trade shocks (countercyclical):

If the $ price of the export commodity goes up, the currency automatically appreciates, moderating the boom.

If the $ price of the export commodity goes down, the currency automatically depreciates, moderating the downturn & improving the balance of payments.

PPT

Why is PPT better than CPI-targetingfor countries with volatile terms of trade?

Better response to trade shocks (accommodating):

If the $ price of imported commodity goes up, CPI target says to tighten monetary policy enough to appreciate the currency. Wrong response. (E.g., oil-importers in 2007-08.)

PPT does not have this flaw .

If the $ price of the export commodity goes up, PPT says to tighten money enough to appreciate. Right response. (E.g., Gulf currencies in 2007-08.) CPI targeting does not have this advantage.

PPT

Simulations Gold producers:

Burkino Faso, Ghana, Mali, South Africa Other commodities:

Coffee (Ethiopia), oil (Nigeria), platinum (S.Africa)

General finding: Under Product Price Targets, their currencies would have depreciated automatically in 1990s when commodity prices declined,

perhaps avoiding messy balance of payments crises.

Would have appreciated automatically in commodity booms, moderating over-heating.

Sources: Frankel (2002, 03a, 05), Frankel & Saiki (2003)

Appendix 3, on fiscal policy:

Chile’s fiscal institutions In 2000 Chile instituted its structural budget rule.

The institution was formalized in law in 2006.

The structural budget deficit must be zero, originally BS > 1% of GDP, then cut to ½ %, then 0 -- where structural is defined by output & copper price

equal to their long-run trend values.

I.e., in a boom the government can only spend increased revenues that are deemed permanent; any temporary copper bonanzas must be saved.

The crucial institutional innovation in Chile

How has Chile avoided over-optimistic official forecasts? especially the historic pattern

of over-exuberance in booms which forecasts in most other governments show?

The estimation of the long-term path for GDP & the copper price is made by two panels of independent experts, and thus is insulated from political pressure & wishful thinking.

Other countries might usefully emulate Chile’s innovation or in other ways delegate to independent agencies

estimation of structural budget deficit paths.

Chile’s fiscal position strengthened immediately: Public saving rose from 2.5 % of GDP in 2000 to 7.9 % in 2005 allowing national saving to rise from 21 % to 24 %.

Government debt fell sharply as a share of GDP and the sovereign spread gradually declined.

By 2006, Chile achieved a sovereign debt rating of A, several notches ahead of Latin American peers.

By 2007 it had become a net creditor. By 2010, Chile’s sovereign rating had climbed to A+,

ahead of some advanced countries.

=> It was able to respond to the 2008-09 recession via fiscal expansion.

The Pay-off

In 2008, with copper prices spiking up, the government of President Bachelet had beenunder intense pressure to spend the revenue. She & Fin.Min.Velasco held to the rule, saving most of it. Their popularity ratings fell sharply.

When the recession hit and the copper price came back down, the government increased spending, mitigating the downturn. Bachelet & Velasco’s

popularity reached historic highs in 2009.

Evolution of approval and disapproval of four Chilean presidents

Presidents Patricio Aylwin, Eduardo Frei, Ricardo Lagos and Michelle BacheletData: CEP, Encuesta Nacional de Opinion Publica, October 2009, www.cepchile.cl. Source: Engel et al (2011).

References by the author Project Syndicate,,

““Escaping the Oil Curse,”  Dec.9, 2011.,”  Dec.9, 2011. ""Barrels, Bushels & Bonds: : How Commodity Exporters Can Hedge Volatility,"  ,"  Oct.17, 2011. Oct.17, 2011. 

““The Natural Resource Curse: A Survey of Diagnoses and Some Prescriptions,” ,” 2012, 2012, Commodity Price Volatility and Inclusive Growth in Low-Income CountriesCommodity Price Volatility and Inclusive Growth in Low-Income Countries , R.Arezki & Z.Min, , R.Arezki & Z.Min, eds.. HKS eds.. HKS RWP12-014.  .  High Level Seminar, IMF Annual Meetings, DC, Sept.2011., IMF Annual Meetings, DC, Sept.2011.

""The Curse: Why Natural Resources Are Not Always a Good Thing,”  ,”  Milken Institute Milken Institute Review, vol.13, 4, vol.13, 4thth quarter quarter 2011..

““The Natural Resource Curse: A Survey,” 2012, ,” 2012, Chapter 2 in in Beyond the Resource Curse, , B.Shaffer & T. Ziyadov, eds. (B.Shaffer & T. Ziyadov, eds. (U.Penn. Press); ); proofs & & notes; ; Summary. .   CID WP195, 2011.

“How Can Commodity Exporters Make Fiscal and Monetary Policy Less Procyclical?” Natural Resources, Finance & Development, R.Arezki, T.Gylfason & A.Sy, eds. (IMF), 2011.  HKS RWP 11-015.

“On Graduation from Procyclicality,” 2013, with C.Végh & G.Vuletin; J. Dev. Economics.

“Chile’s Solution to Fiscal Procyclicality,” 2012, Transitions blog, Foreign Policy.

“A Solution to Fiscal Procyclicality: The Structural Budget Institutions Pioneered by Chile,” in Fiscal Policy and Macroeconomic Performance, 2012.   Central Bank of Chile WP 604, 2011.

 "Product Price Targeting -- A New Improved Way of Inflation Targeting"Product Price Targeting -- A New Improved Way of Inflation Targeting ," in," in MAS MAS Monetary Review Monetary Review Vol.XI, issue 1, April 2012 (Monetary Authority of Singapore).Vol.XI, issue 1, April 2012 (Monetary Authority of Singapore).

“A Comparison of Product Price Targeting and Other Monetary Anchor Options, for Commodity-Exporters in Latin America," Economia, vol.11, 2011 (Brookings), NBER WP 16362.