External Adjustment in Oil Exporters: The Role of Fiscal Policy and the Exchange Rate
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Summary:
After the decline in oil prices, many oil exporters face the need to improve their external balances. Special characteristics of oil exporters make the exchange rate an ineffective instrument for this purpose and give fiscal policy a sizeable role. These conclusions are supported by regression analysis of the determinants of the current account balance and of the trade balance. The results show little or no relationship with the exchange rate and, especially for the less diversified oil exporters (including the Gulf Cooperation Council), a strong relationship with the fiscal balance or government spending.
Series:
Working Paper No. 2016/107
Subject:
Balance of payments Commodities Current account Current account balance Expenditure International trade Oil Trade balance
English
Publication Date:
June 8, 2016
ISBN/ISSN:
9781484379929/1018-5941
Stock No:
WPIEA2016107
Pages:
45
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