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Commodity exports and macroeconomic performance: The case of palm oil in Malaysia

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  • Sayyed Mahdi Ziaei
  • Issa Ali
  • Francesco Tajani

Abstract

The objective of this paper is to contribute towards understanding the effects of palm oil production upon key macroeconomic variables in Malaysian economy. A dynamic general equilibrium model was employed in order to analyze the dynamic macroeconomic adjustment processes arising from palm oil production increase for Malaysian economy (the second biggest palm oil producer in world), operating under a managed float exchange rate regime. The model utilized in this paper is likely to be of interest to other palm oil-exporting economies with similar features such as that of Indonesia. Findings from this paper show that an increase in palm oil production would potentially result in an increase in private capital stock, private sector wealth, real income, public capital stock, human capital stock and non-palm oil output supply and demand. However, the revenue arising from the palm oil sector also has the potential to deteriorate the non-palm-oil trade balance through a slight loss of competitiveness from a real exchange rate appreciation.

Suggested Citation

  • Sayyed Mahdi Ziaei & Issa Ali & Francesco Tajani, 2021. "Commodity exports and macroeconomic performance: The case of palm oil in Malaysia," Cogent Economics & Finance, Taylor & Francis Journals, vol. 9(1), pages 1901388-190, January.
    • Handle: RePEc:taf:oaefxx:v:9:y:2021:i:1:p:1901388
    DOI: 10.1080/23322039.2021.1901388
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    Cited by:

    1. Azhan Rashid Senawi & Shahariah Asmuni & Zaidi Mohd Aminuddin & Saliza Sulaiman & Saliza Zuraidah Ismail & Nur Ilyia Natasha Abd Kadir & Nur Sarah Dayana Kamarul Zahrin & Nur Aimi Shahirah Nasirrudin , 2024. "Macroeconomics Factors Affecting Net Exports of Oil Palm Industry in Malaysia," Information Management and Business Review, AMH International, vol. 16(3), pages 490-501.
    2. Ariodillah Hidayat & Bernadette Robiani & Taufiq Marwa & Suhel Suhel, 2023. "Competitiveness, Market Structure, and Energy Policies: A Case Study of the World s Largest Crude Palm Oil Exporter," International Journal of Energy Economics and Policy, Econjournals, vol. 13(3), pages 111-121, May.

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