ERF 26th Annual Conference
Monetary Policy, Oil Stabilization Fund and the Dutch Disease
No.
ERF26_197
Publisher
ERF
Date
September, 2020
Topic
F4. Macroeconomic Aspects of International Trade and Finance
Q4. Energy
E5. Monetary Policy, Central Banking, and the Supply of Money and Credit
This paper contributes to the literature on the Dutch disease effect in a small open oil exporting economy. To this end, we formulate a DSGE model in line with the balanced-growth path theory. Specifically, our main contribution to the literature is to highlight the importance of policy-mix in oil exporting countries by introducing a fiscal policy and an oil stabilization fund in the model besides alternative monetary rules. Our main findings show that the Dutch disease, through the spending effect, does not occur only in the case of fixed exchange rate regime. An expansionary fiscal policy contributes to improve the state of the economy through the impact of public spending on the productivity of the manufacturing sector.
Authors
Jean-Pierre Allegret
Professor, University Côte d’Azur
Authors
Mohamed Tahar Benkhodja
Assistant Professor of Economics, ESSCA School of...
Authors
Tovonony Razafindrabe
CREM, Université Rennes