Macroeconomic Effects of Reforms on Three Diverse Oil Exporters: Russia, Saudi Arabia, and the UK

October 11, 2019

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Samya Beidas-Strom, and Marco Lorusso. Macroeconomic Effects of Reforms on Three Diverse Oil Exporters: Russia, Saudi Arabia, and the UK, (USA: International Monetary Fund, 2019) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

We build and estimate open economy two-bloc DSGE models to study the transmission and impact of shocks in Russia, Saudi Arabia and the United Kingdom. After accounting for country-specific fiscal and monetary sectors, we estimate their key policy and structural parameters. Our findings suggest that not only has output responded differently to shocks due to differing levels of diversification and structural and policy settings, but also the responses to fiscal consolidation differ: Russia would benefit from a smaller state foot-print, while in Saudi Arabia, unless this is accompanied by structural reforms that remove rigidities, output would fall. We also find that lower oil prices need not be bad news given more oil-intensive production structures. However, lower oil prices have hurt these oil producers as their public finances depend heavily on oil, among other factors. Productivity gains accompanied by ambitious structural reforms, along with fiscal and monetary reforms could support these economies to achieve better outcomes when oil prices fall, including via diversifying exports.

Subject: Commodities, Consumption, Labor, National accounts, Oil, Oil prices, Oil, gas and mining taxes, Prices, Taxes

Keywords: Bayesian estimation, Consumption, Core inflation, DSGE model, Economic diversification, Exchange rate, Fiscal policy, Gas and mining taxes, Global, Inflation targeting, Labour market, Managed float, Monetary policy, Nominal interest rate, Oil, Oil demand, Oil intensity, Oil prices, Price indexation, Shocks and commodity exporters, State footprint, Trade balance, UK benchmark, UK experience, UK macroeconomy, UK model, UK policy rate, UK state, WP

Publication Details

Pages:

66
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2019/214
Stock No:

WPIEA2019214
ISBN:

9781498320504
ISSN:

1018-5941

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