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External Adjustment in Oil Exporters: The Role of Fiscal Policy and the Exchange Rate
Author:
Mr. Alberto Behar
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Mr. Armand P Fouejieu
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https://orcid.org/0000-0002-2527-4601
Series:
IMF Working Papers
Volume/Issue:
Volume 2016: Issue 107
Language:
English
Publication Date:
08 Jun 2016
DOI:
https://doi.org/10.5089/9781484379929.001
ISBN:
9781484379929
ISSN:
1018-5941
Pages:
45
Keywords:
WP; fiscal policy; oil exporter; government spending; foreign currency; trade balance response; Oil exporters; current account; trade balance; exchange rates; trade volume elasticities; Marshall Lerner conditions; government trade balance multiplier; current account response; expenditure switching; price effect; trade balance equation; current account elasticity; wage effect; trade balance regression; trade balance elasticity; reversal episode; Current account balance; Oil; Global
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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After the decline in oil prices, many oil exporters face the need to improve their external balances. Special characteristics of oil exporters make the exchange rate an ineffective instrument for this purpose and give fiscal policy a sizeable role. These conclusions are supported by regression analysis of the determinants of the current account balance and of the trade balance. The results show little or no relationship with the exchange rate and, especially for the less diversified oil exporters (including the Gulf Cooperation Council), a strong relationship with the fiscal balance or government spending.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund