Terms of trade shocks and macroeconomic adjustment in a resource exporting economy

Harvie, Charles; Hoa, Tran Van

doi:10.1016/0301-4207(94)90023-x

Cited by 12 publications

(7 citation statements)

References 26 publications

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“…1990s, endogenous capital stock accumulation was examined as an additional wealth effect, implications for adjustment arising from different exchange rate regimes (fixed or flexible) were considered, and optimal policy responses were identified in a dynamic context with the aim of minimising the adverse effects of a resource boom on the non resource sector (see Harvie, and Verrucci, 1991;Harvie, 1991;Harvie and Maleka, 1992;Harvie, 1992a;Harvie, 1992b;Harvie, 1992c;Harvie and Gower, 1993;Harvie, 1993;Harvie and Tran Van Hoa, 1994a;Harvie and Thaha, 1994). Given the recent turbulence in oil and resource prices it is opportune to revisit this issue.…”

Section: Literature Review and Conceptual Frameworkmentioning

confidence: 99%

Resource price turbulence and macroeconomic adjustment for a resource exporter: A conceptual framework for policy analysis

Cox

Harvie

2010

Energy Economics

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Section: Literature Review and Conceptual Frameworkmentioning

confidence: 99%

Resource price turbulence and macroeconomic adjustment for a resource exporter: A conceptual framework for policy analysis

Cox

Harvie

2010

Energy Economics

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“…The theoretical framework utilized combines the contributions of Harvie and Gower (1993) and Harvie (1992b), which themselves represent extensions to that of Buiter and F'urvis (BP) (1982). It is based upon a number of important assumptions, and these are now outlined.…”

Section: Theoretical Framework -The Modelmentioning

confidence: 99%

The macroeconomic effects of oil shocks under fixed and flexible ex change rates – a comparison

Harvie

1993

OPEC Review

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THE RECENT experience of the United Kingdom, in which it was ultimately forced to leave the European Exchange Rate Mechanism (ERM), suggests that it may not be appropriate for an oil-producing and exporting economy to fix its nominal exchange rate against its major trading, and non-oil-producing, partners' currencies. This is likely to be the case for the UK, in particular, which is now experiencing declining oil production and a deterioration in its oil trade balance.In a recent paper in this journal, Harvie (1992a) suggested that, for this economy, a declining real exchange rate was necessary to improve the competitiveness of non-oil exports to offset the deteriorating oil trade balance. If the nominal exchange rate is fixed, vis-his its main trading partners' currencies, this implies that wages and prices would face the brunt of the adjustment, thereby requiring a more painful, and possibly more prolonged, adjustment of output and employment than would be the case with a flexible exchange rate.The objective of this paper is to explore further, from a primarily theoretical perspective, the macroeconomic implications arising for an oil-producing economy operating with either a fixed or flexible exchange rate system1to explore, in particular, which of these two extreme systems best offers insulatory properties, in the sense of reducing the volatility of adjustment of key macroeconomic variables arising primarily from oil-related shocks.The issue is explored by analyzing a theoretical framework, which emphasizes the long-run nature of the adjustment process. Such an emphasis is particularly pertinent in models which assume that economic agents possess rational expectations, where long-run equilibrium will have a major bearing upon the short-run adjustment process itself, However, due to the complexity of the model developed here, it is not possible to derive analytically unambiguous results, hence emphasis is placed upon deriving results through numerical simulation. The results derived The author is fram the

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“…Thus, unlike the C-H model and other long run models, the stock of capital imports ( The overseas sector consists of the current account and the oil trade balance. Developments in the current account are given by Equation 27a (see for example Harvie and Gower (1993) and Harvie (1994)). …”

Section: Model Equationsmentioning

confidence: 99%

“…The oil related macroeconomic model utilized in the current study of the Libyan economy has its foundation in the models of Dornbusch (1976); Buiter and Miller (1981); Eastwood and Venables (1982); Buiter and Purvis (1982); Neary and Van Wijnbergen (1984); Harvie and Gower (1993); Harvie and Thaha (1994) and more recently and importantly, Cox and Harvie (2010) for the case of a flexible exchange rate in the context of advanced resource-abundant economies. The latter is a dynamic general equilibrium model focusing on the long run nature of the adjustment…”

Section: Introductionmentioning

confidence: 99%

“…Furthermore, the literature has also taken into account implications for adjustment arising from different exchange rate regimes (fixed or flexible) and the identification of optimal policy responses in a dynamic context with the objective of minimizing the adverse effects of a resource boom on the non-resource sector (see, for example, (Harvie and Gower, 1993;Harvie and Thaha, 1994;Cox and Harvie, 2010;Ali and Harvie, 2013)). …”

Section: Introductionmentioning

confidence: 99%

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2015

Energy Economics Letters

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Terms of trade shocks and macroeconomic adjustment in a resource exporting economy

Cited by 12 publications

References 26 publications

Resource price turbulence and macroeconomic adjustment for a resource exporter: A conceptual framework for policy analysis

Resource price turbulence and macroeconomic adjustment for a resource exporter: A conceptual framework for policy analysis

The macroeconomic effects of oil shocks under fixed and flexible ex change rates – a comparison

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