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Mr. Johannes Herderschee and Ms. Luisa Zanforlin
Whereas most of the literature related to the so-called “resource curse” tends to emphasize on institutional factors and public policies, in this research we focus on the role of the financial sector, which has been surprisingly overlooked. We find that countries that have financial systems with more depth, as well as those that actively manage their central banks’ balance sheets experience less exchange-rate appreciation than countries that do not. We analyze the relationship between these two findings and suggest that they appear to follow separate mechanisms.
Mr. Johannes Herderschee and Ms. Luisa Zanforlin

in Table 2 ). In addition, we tested for robustness of our results against initial conditions in the external sector (column 4 in Table 2 ). Central banks’ balance sheet management policies appear to have a significant impact in containing the appreciation of the REER . We find this result holds regardless of whether a country has recently experienced a natural resource discovery or otherwise (columns 2–6 in Table 3 ). However, we find a significantly larger effect of central bank policies in resource rich countries. (column 2–4 in Table 3 ). Robustness