Dutch Disease
Dutch disease is the squeeze on tradable non-resource sectors when a resource boom or capital inflow appreciates the real exchange rate and pulls factors into the booming sector.
Definition
Dutch Disease refers to resource sectors when a resource boom or capital inflow appreciates the real exchange rate and pulls factors into the booming sector. Keep that definition fixed when comparing series, managers, or regimes — renaming the same tape does not create a new signal.
Why it matters
It is a named object desks use to frame risk, positioning, or process. When resource sectors when a resource boom or capital inflow appreciates the real exchange rate and pulls factors into the booming sector shifts, related hedges, limits, and narratives usually need an explicit update rather than a quiet assumption.
Case
Suppose a desk is positioned for the opposite of what dutch disease is saying. If resource sectors when a resource boom or capital inflow appreciates the real exchange rate and pulls factors into the booming sector moves against that book, the first question is not “is the story clever?” but whether size, hedges, and stop logic still match the observation.
How to read it
Keep the definition fixed, then challenge it with cross-checks before sizing. Prefer a short written null hypothesis for Dutch Disease: what would falsify the current reading in the next window?