 The heterogeneity among commodity-rich economies: Beyond the prices of commoditiesJournal of Macroeconomics, 2020, vol. 66, issue C Abstract: Commodity-rich economies share many common factors, which resulted in the generalization of any findings obtained from a single commodity-rich economy. This paper proposes a small open economy model for a commodity-rich country and studies the triggers of business cycles for four different commodity-rich economies to highlight the existence of heterogeneity among commodity-rich economies. The model introduces government consumption in a non-separable form to the utility function. Commodities have a central role in private consumption, production of final goods, and windfalls for the domestic government. We feed the model with a variety of shocks suggested by the previous literature. The estimations of the model show that oil-rich economies are more vulnerable to external shocks than their commodity-rich counterparts. The findings of the paper indicate that government spending is a significant source of heterogeneity. Also, given the relatively higher share of commodity rents when the principal commodity is oil, oil-rich countries need to adopt more prudential fiscal measures. Keywords: New keynesian models; Business cycle; Open economy macroeconomics; Joint analysis of fiscal and monetary policy; Commodity prices (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:66:y:2020:i:c:s0164070420301853 DOI: 10.1016/j.jmacro.2020.103260 Access Statistics for this article Journal of Macroeconomics is currently edited by Douglas McMillin and Theodore Palivos More articles in Journal of Macroeconomics from Elsevier |
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