Trade Shoks and Aggregate Fluctuations in an Oil-Exporting Economy

Francisco J. Sáez and Luis Puch
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Francisco J. Sáez: Departamento de Economía Cuantitativa, Universidad Complutense de Madrid, https://www.ucm.es/fundamentos-analisis-economico2

Documentos de Trabajo del ICAE from Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico

Abstract: In this paper we analyze the role of trade shocks in shaping aggregate fluctuations in Venezuela from 1950 to 1995. To this end a stochastic general equilibrium model of a small open economy whose main productive activity rests in the exports of a single basic product is specified. Shocks to the terms of trade which are directly associated to oil price changes are modelled as a foreign transfer. We find that this approach gives predictions that are consistent with the time series properties of Venezuela when i) the income efect of consumption more than compensates the substitution effect that generates the oil transfer and, ii) there is imperfect capital mobility. In particular, our model specification captures the observed patterns of the main aggregates after the oil resource boom of 1974.

Keywords: Trade shocks; Aggregate fuctuations; Emerging economies. (search for similar items in EconPapers)
JEL-codes: E32 E37 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2003
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Citations: View citations in EconPapers (2)

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