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Dutch Disease, Unemployment and Structural Change

Author

Listed:
  • Mariano Kulish

    (University of Sydney/CAMA)

  • James Morley

    (University of Sydney/CAMA)

  • Nadine Yamout

    (American University of Beirut)

  • Francesco Zanetti

    (University of Oxford)

Abstract

We build a multi-sector, open economy model that captures the effects of a commodity boom on unemployment when there is also ongoing structural change. We use Bayesian methods to jointly estimate transition path effects of structural change and business cycle dynamics. Applying our model to the Australian economy, the estimates suggest that the large, permanent increase in commodity prices of the 2000s is critical for the observed appreciation of the real exchange rate and the contraction of net exports. Consistent with Dutch disease, the commodity boom increases unemployment in the short run. But structural change in the form of shifting preferences over non-tradable consumption and non-tradable employment, a process somewhat akin to structural transformation, explains the long-run reduction in unemployment, the increasing importance of the non-tradable sector for aggregate fluctuations and the increasing responsiveness of the tradable sector to shocks

Suggested Citation

  • Mariano Kulish & James Morley & Nadine Yamout & Francesco Zanetti, 2023. "Dutch Disease, Unemployment and Structural Change," Working Papers 262, Red Nacional de Investigadores en Economía (RedNIE).
    • Handle: RePEc:aoz:wpaper:262
    as

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    File URL: https://rednie.eco.unc.edu.ar/files/DT/262.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    : Dutch disease; commodity prices; unemployment; structural change; structural transformation;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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