Rickne, Johanna () (Research Institute of Industrial Economics (IFN))
Abstract
Institutional and political characteristics affect the extent to which the real exchange rates of oil-exporting countries co-move with the oil price. In a simple theoretical model, good governance insulates real exchange rates from price volatility by generating a smoother pattern of fiscal spending over the resource price cycle. Empirical tests on a panel of 33 oil-exporting countries provide evidence that countries with high bureaucratic quality, strong and impartial legal systems, democratic governing systems, and more equal income distributions have real exchange rates which co-move less with the oil price.
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Publisher Info
Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number
810.
Length: 47 pages Date of creation: 23 Sep 2009 Date of revision: Handle: RePEc:hhs:iuiwop:0810
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Find related papers by JEL classification: F31 - International Economics - - International Finance - - - Foreign Exchange H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
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