Source: International Monetary Fund
Macroeconomic Effects of Reforms on Three Diverse Oil Exporters: Russia, Saudi Arabia, and the UK
October 11, 2019
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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-speci?c ?scal and monetary sectors, we estimate their key policy and struc-tural parameters. Our ?ndings suggest that not only has output responded di?erently to shocks due to di?ering levels of diversi?cation and structural and policy settings, but also the responses to ?scal consolidation di?er: Russia would bene?t 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 ?nd that lower oil prices need not be bad news given more oil-intensive production structures. However, lower oil prices have hurt these oil pro-ducers as their public ?nances depend heavily on oil, among other factors. Productivity gains accompanied by ambitious structural reforms, along with ?scal and monetary reforms could support these economies to achieve better outcomes when oil prices fall, including via diversifying exports.
Working Paper No. 19/214
October 11, 2019
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