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External adjustment in oil exporters: The role of fiscal policy and the exchange rate
Author(s) -
Behar Alberto,
Fouejieu Armand
Publication year - 2018
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/twec.12593
Subject(s) - economics , exchange rate , balance (ability) , government spending , monetary economics , fiscal policy , government (linguistics) , balance of trade , effective exchange rate , international economics , macroeconomics , market economy , medicine , linguistics , philosophy , welfare , physical medicine and rehabilitation
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, a strong relationship with the fiscal balance or government spending.