Oil Shocks and Macroeconomic Adjustment: a DSGE modeling approach for the Case of Libya, 1970-2007
Autumn 2011 & Winter 2012, Volume 39 - Number 2 علمی-پژوهشی/ISC (18 صفحه - از 17 تا 34)
کلید واژه های ماشینی : Oil Shocks Macroeconomic Adjustment ، Libya ، Case ، DSGE Case Libya ، Harvie ، In Libya ، Figure ، The Macroeconomic Effects Oil Shocks ، Source ، Resource Shocks Macroeconomic Adjustment
Libya experienced a substantial increase in oil revenue as a result of increased oil prices during the period of the late 1970s and early 1980s, and again after 2000. Recent increases in oil production and the price of oil, and their positive and negative macroeconomic impacts upon key macroeconomic variables, are of considerable contemporary importance to an oil dependent economy such as that of Libya. In this paper a dynamic macroeconomic model is developed for Libya to evaluate the effects of additional oil revenue, arising from positive oil production and oil price shocks, upon key macroeconomic variables, including the real exchange rate. It takes into consideration the impact of oil revenue upon the non-oil trade balance, foreign asset stock, physical capital stock, human capital stock, imported capital stock and non-oil production. Model simulation results indicate that additional oil revenue brings about: an increase in government revenue, increased government spending in the domestic economy, increased foreign asset stocks, increased output and wages in the non oil sector. However, increased oil revenue may also produce adverse consequences, particularly upon the non-oil trade balance, arising from a loss of competitiveness of non-oil tradable goods induced by an appreciation of the real exchange rate and increased imports stimulated by increased real income. Model simulation results also suggest that investment stimulating policy measures by government produce the most substantive benefits for the economy.خلاصه ماشینی:
"In this paper a dynamic macroeconomic model is developed for Libya to evaluate the effects of additional oil revenue, arising from positive oil production and oil price shocks, upon key macroeconomic variables, including the real exchange rate. These variables are real income, government real oil revenue, non-oil output, private capital stock, public capital stock, human capital stock, imported capital stock, foreign asset stock, non-oil trade balance, real exchange rate, domestic price level and private sector real wealth. The increased private capital stock is induced by increased non-oil output supply (see Equations 3 and 4 in table 1), which in turn is induced by government investment spending on physical, human and imported capital (technology effect) and is of further benefit to the private sector. The major conclusion derived from this paper is that a permanent increase in oil production and oil price by 15 percent will potentially result in an increase in private capital stock, hence private sector wealth, real income, domestic physical capital stock, human capital stock, imported capital stock and non-oil supply (and demand). Source: Authors Figure 1: Foreign asset stocks Source: Authors Figure 2: Government revenue Source: Authors Figure 3: Price level Source: Authors Figure 4: Real exchange rate Source: Authors Figure 5: Non-oil trade balance Source: Authors Figure 6: Private real wealth Source: Authors Figure 7: Private capital stock Source: Authors Figure 8: Real income Source: Authors Figure 9: Non-oil output Source: Authors Figure 10: Public capital stock Source: Authors Figure 11: Human capital stock Source: Authors Figure 12: Imported capital stock Source: Authors"
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