External Shocks and Structural Adjustments: A Dutch Disease Dynamic Analysis

M Fardmanesh

Working Papers from Yale - Economic Growth Center

Abstract: This paper develops a three-sector dynamic general equilibrium model of Dutch Disease for an oil-exporting small open economy. Agricultural, manufacturing and nontradable goods are distinguished. Sectoral capital stock adjusts gradually. Spiral or monotone adjustment paths occur depending on the typology of the economy. A more developed oil exporter could experience spiral adjustments; the short-run and long-run sectoral effects of an oil shock are qualitatively different. A less developed oil exporter would experience monotone adjustments; the short-run and long-run sectoral effects of an oil shock are qualitatively similar. The model developed can be applied to any "small" open economy adjusting to external revenues and terms of trade shocks.

Keywords: ECONOMIC MODELS; OIL INDUSTRY (search for similar items in EconPapers)
JEL-codes: C51 F41 (search for similar items in EconPapers)
Pages: 25 pages
Date: 1996
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:fth:yalegr:760

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