Boom bust cycle asymmetrical fiscal response and the dutch disease arezki rabah ismail kareem. EconPapers: Journal of Development Economics 2019-03-12

Boom bust cycle asymmetrical fiscal response and the dutch disease arezki rabah ismail kareem Rating: 8,2/10 1479 reviews

Boom

boom bust cycle asymmetrical fiscal response and the dutch disease arezki rabah ismail kareem

Much has been written about the resource curse. Moreover, the lack of downward adjustment in real effective exchange rate during commodity busts may have consequences on the economic performance of resource rich countries. Asymmetry in fiscal policy to resource-price shocks across different types of expenditure may have strong implications on competitiveness outside the resource sector. The higher domestic content of current expenditure spending however also means it is more susceptible to interest group lobbying, and the wage bill and subsidies particularly may be difficult to adjust downward due to the adverse impact this may have on the vulnerable segment of the population. For the most part, commodity-rich countries continued to accumulate debt as public expenditure failed to adjust sufficiently downwards following commodity price decreases. It should be noted, however, that the effectiveness of those fiscal institutions relies crucially on the ability of governments in resource rich countries to design and put in place checks and balances to prevent rent seeking and limit creative accounting. A key feature of each chapter is a recommended reading list for those who wish additional, more in-depth material on these issues to further inform policymakers and other stakeholders on the theoretical and analytical underpinnings of the policy advice.

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OMC

boom bust cycle asymmetrical fiscal response and the dutch disease arezki rabah ismail kareem

This raises concerns about potential adverse consequences on the long-term economic performance of oil-producing countries. Third, we find mixed results showing that fiscal rules have helped reduce the degree of responsiveness of current spending during booms. Please ask Hassan Zaidi to update the entry or the correct email address. It should be noted, however, that the effectiveness of those fiscal institutions relies crucially on the ability of governments in resource rich countries to design and put in place checks and balances to prevent rent seeking and limit creative accounting. That will avoid the crowding out of capital spending that is crucially needed in many of those resource rich countries.

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WTO

boom bust cycle asymmetrical fiscal response and the dutch disease arezki rabah ismail kareem

This model leads to a decoupling between real exchange rate and commodity price movement during busts. In fact, many resource rich countries have put in place fiscal institutions to help rein their government spending during boom times. In turn, this may have adverse consequences on non-resource tradable production, which may negatively affect the economic performance of resource rich countries over the medium- and long-term. This results in a lesser adjustment to the real exchange rate than would have been the case under a more symmetric pattern of adjustment in public expenditure. In contrast, we find evidence that fiscal rules are associated with a significant reduction in capital expenditure during busts while responsiveness to boosts is more muted. General contact details of provider:.

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EconPapers: Journal of Development Economics

boom bust cycle asymmetrical fiscal response and the dutch disease arezki rabah ismail kareem

This phenomenon is most likely rooted in political pressures that governments in resource rich countries face. In turns, those decisions may impact the competitiveness of those resource rich countries. We examine the behavior of expenditure policy during boom-bust in commodity price cycles, and its implication for real exchange rate movements. Thus, commodity rich countries going through a commodity price bust may rely more on cuts in capital expenditure than in current expenditure. This results in a lesser adjustment to the real exchange rate than would have been the case under a more symmetric pattern of adjustment in public expenditure.

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RABAH AREZKI: BOOKS AND SELECTED PUBLICATIONS

boom bust cycle asymmetrical fiscal response and the dutch disease arezki rabah ismail kareem

This raises concerns about potential adverse consequences of this asymmetry on economic performance in oil-producing countries. Governments in resource-rich countries are recipient of income flow from natural resource, and thus play an important role in how the resource related revenue is used and distributed. Resource-rich countries often experience large movements in their exports receipts as a result of sharp swings in commodity prices. However, policy makers should tailor those new fiscal institutions to account for the rigidity in current spending during busts. That will avoid the crowding out of capital spending that is crucially needed in many of those resource rich countries. Third, we find mixed results showing that fiscal rules have helped reduce the degree of responsiveness of current spending during booms.

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Back Matter : Boom, Bust, or Prosperity? Managing Sub

boom bust cycle asymmetrical fiscal response and the dutch disease arezki rabah ismail kareem

This phenomenon is most likely rooted in political pressures that governments in resource rich countries face. One possible recommendation for policy makers would be to limit increases in across the board spending during boom times. That limitation would render less difficult curbing spending during bust times. Thus, commodity rich countries going through a commodity price bust may rely more on cuts in capital expenditure than in current expenditure. You can help correct errors and omissions.

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RABAH AREZKI: BOOKS AND SELECTED PUBLICATIONS

boom bust cycle asymmetrical fiscal response and the dutch disease arezki rabah ismail kareem

That limitation would render less difficult curbing spending during bust times. In turns, those decisions may impact the competitiveness of those resource rich countries. Those pressures are such that it may be far easier to increase public expenditure during commodity price booms than to cut public expenditure during commodity price busts. In turn, this model leads to a relative decoupling between real exchange rate and commodity price movement during busts. In turn, this may have adverse consequences on non-resource tradable production, which may negatively affect the economic performance of resource rich countries over the medium- and long-term. We test our model's theoretical predictions and underlying assumptions using panel data for 32 oil producing countries over the period 1992 to 2009. Third, we find limited evidence that fiscal rules have helped reduce the degree of responsiveness of current spending during booms.

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Journal of Development Economics, Volume 101, Pages 1

boom bust cycle asymmetrical fiscal response and the dutch disease arezki rabah ismail kareem

Second, we find that current spending is downwardly rigid, but increase in boom time and conversely for capital spending. This raises concerns about potential adverse consequences on the long-term economic performance of oil-producing countries. It also allows you to accept potential citations to this item that we are uncertain about. Second, we find that current spending is downwardly rigid, but increase in boom time and conversely for capital spending. We test our model's theoretical predictions and underlying assumptions using panel data for 32 oil-producing countries over the period 1992 to 2009. If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item.

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Boom

boom bust cycle asymmetrical fiscal response and the dutch disease arezki rabah ismail kareem

. For the most part, commodity-rich countries continued to accumulate debt as public expenditure failed to adjust sufficiently downwards following commodity price decreases. We test our model's theoretical predictions and underlying assumptions using panel data for 32 oil producing countries over the period 1992 to 2009. The higher domestic content of current expenditure spending however also means it is more susceptible to interest group lobbying, and the wage bill and subsidies particularly may be difficult to adjust downward due to the adverse impact this may have on the vulnerable segment of the population. One possible recommendation for policy makers would be to limit increases in across the board spending during boom times. To do so, we introduce a Dutch disease model with downward stickiness in government current spending, which we assume is non-tradable intensive relative to capital expenditure.

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