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A structural VAR model of the Fiji Islands

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  • Narayan, Seema

Abstract

A four-dimensional Structural Vector Auto-regression (SVAR) model is applied to investigate the implications of fuel imports and devaluation policy on Fiji's current account deficits and economic growth. The paper finds that short-term deterioration of the current account is partly due to higher fuel imports. The impulse response analysis shows that a standard deviation fall in Fiji's REER leads to a J-curve type response in the current account within a short period. Furthermore, fuel import demand and devaluations are found to have negative, but transitory, effect on economic growth.

Suggested Citation

  • Narayan, Seema, 2013. "A structural VAR model of the Fiji Islands," Economic Modelling, Elsevier, vol. 31(C), pages 238-244.
  • Handle: RePEc:eee:ecmode:v:31:y:2013:i:c:p:238-244
    DOI: 10.1016/j.econmod.2012.11.014
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    Cited by:

    1. Manalo, Josef & Perera, Dilhan & Rees, Daniel M., 2015. "Exchange rate movements and the Australian economy," Economic Modelling, Elsevier, vol. 47(C), pages 53-62.
    2. Erkan Özata, 2014. "Sustainability of current account deficit with high oil prices: Evidence from Turkey," International Journal of Economic Sciences, Prague University of Economics and Business, vol. 2014(2), pages 71-88.
    3. Vaqar Ahmed & Muhammad Zeshan, 2014. "Decomposing Change in Energy Consumption of the Agricultural Sector in Pakistan," Agrarian South: Journal of Political Economy, Centre for Agrarian Research and Education for South, vol. 3(3), pages 369-402, December.
    4. Prakash, Kushneel & Maiti, Dibyendu, 2016. "Does devaluation improve trade balance in small island economies? The case of Fiji," Economic Modelling, Elsevier, vol. 55(C), pages 382-393.

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    More about this item

    Keywords

    SVAR; Fuel imports; Current account; Economic growth; Devaluation; Small Island Developing State;
    All these keywords.

    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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