Commodity Booms and Government Expenditure Responses
May 1, 1991
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Summary
This paper develops a model incorporating asymmetric government expenditure behavior in response to a windfall revenue gain occasioned by a transitory commodity boom. The model is used to illustrate the transitional dynamics of a stylized economy during the boom period and the nature of the macroeconomic disequilibria which emerge in the post-boom period. Country case studies of Sri Lanka, Malaysia, and Kenya support the model’s predictions and the protracted nature of adjustment following the waning of the boom.
Subject: Commodities, Commodity booms, Expenditure, Exports, Foreign exchange, International trade, Real exchange rates, Trade balance
Keywords: commodity boom, Commodity booms, commodity price bust, current account, exchange rate, Exports, price boom, Real exchange rates, Trade balance, traded goods, world commodity cycle, WP
Pages:
44
Volume:
1991
DOI:
Issue:
044
Series:
Working Paper No. 1991/044
Stock No:
WPIEA0441991
ISBN:
9781451846362
ISSN:
1018-5941
Notes
Includes country experiences for Kenya, Malaysia and Sri Lank.
