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Evaluating monetary policy options for managing resource revenue shocks when fiscal policy is laissez-faire: Application to Nigeria

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  • Chuku Chuku

Abstract

This study considers the implications of alternative monetary policy regimes to deal with a laissez-faire fiscal policy rule, where the government completely spends resource revenue windfall contemporaneously. A three sector dynamic stochastic general equilibrium model, which features key structural characteristics of resource-rich developing economies, such as; the Dutch disease, limited international capital mobility, credit constrained consumers, and limited labour mobility are core ingredients of the model. The model is calibrated to match the Nigerian economy.

Suggested Citation

  • Chuku Chuku, 2016. "Evaluating monetary policy options for managing resource revenue shocks when fiscal policy is laissez-faire: Application to Nigeria," WIDER Working Paper Series wp-2016-45, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2016-45
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    File URL: https://www.wider.unu.edu/sites/default/files/wp2016-45.pdf
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