Commodity Booms and Government Expenditure Responses

Sanjeev Gupta and Kenneth M. Miranda

No 1991/044, IMF Working Papers from International Monetary Fund

Abstract: This paper develops a model incorporating asymmetric government expenditure behavior in response to a windfall revenue gain occasioned by a transitory commodity boom. The model is used to illustrate the transitional dynamics of a stylized economy during the boom period and the nature of the macroeconomic disequilibria which emerge in the post-boom period. Country case studies of Sri Lanka, Malaysia, and Kenya support the model’s predictions and the protracted nature of adjustment following the waning of the boom.

Keywords: WP; exchange rate; commodity boom; current account; traded goods; price boom; world commodity cycle; commodity price bust; Real exchange rates; Commodity booms; Trade balance; Exports (search for similar items in EconPapers)
Pages: 44
Date: 1991-05-01
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Citations: View citations in EconPapers (3)

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