Technology, Employment, and the Oil-Countries Business Cycle

No 1405, Working Papers from BBVA Bank, Economic Research Department

Abstract: On the ground of the significance and potential dual-nature of oil price shocks- they may act simultaneously like pure technology and pure expenditure shocks- in the context of the oil-countries-net oil-exporters with a substantial share of oil-income on their total export an/or fiscal-income. The paper questions the validity in such context of Gal s (1999) influential methodology for evaluating- so far, negatively- the empirical merits of it aimed to restore such validity by disentangling oil-price shocks from the rest of shocks. The comparison of the results from the application of both methodologies to Norway, Mexico, Russia, Trinidad&Tobago and Venezuela, besides supporting the dual-nature hypothesis and the necessity of such disentangling, proves the latter to be instrumental to get results consistent with Gal s (1999). Additionally, the paper unveil some startling facts about the effects of oil price shocks in this context remarkably, the prevalence of their technological-nature when oil-income has a higher weight on export than on fiscal-income, and of their expenditure-nature otherwise and shed some light on the influence of institutional reform on such effects.

Keywords: SVAR; identifying restrictions; small open economies; oil economies; dutch disease; resource curse (search for similar items in EconPapers)
JEL-codes: C32 E32 F41 F44 Q33 (search for similar items in EconPapers)
Pages: 73 pages
Date: 2014-02
New Economics Papers: this item is included in nep-cis, nep-ene, nep-mac and nep-sog
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