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External Shocks and Structural Adjustments : A Dutch Disease Dynamic Analysis


  • Fardmanesh, M


This paper develops a three-sector dynamic general equilibrium model of Dutch Disease for an oil-exporting small open economy. Agricultural, manufacturing and nontradable goods are distinguished. Sectoral capital stock adjusts gradually. Spiral or monotone adjustment paths occur depending on the typology of the economy. A more developed oil exporter could experience spiral adjustments; the short-run and long-run sectoral effects of an oil shock are qualitatively different. A less developed oil exporter would experience monotone adjustments; the short-run and long-run sectoral effects of an oil shock are qualitatively similar. The model developed can be applied to any "small" open economy adjusting to external revenues and terms of trade shocks.

Suggested Citation

  • Fardmanesh, M, 1996. "External Shocks and Structural Adjustments : A Dutch Disease Dynamic Analysis," Papers 760, Yale - Economic Growth Center.
  • Handle: RePEc:fth:yalegr:760

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    Cited by:

    1. Everhart, Stephen & Duval-Hernandez, Robert, 2001. "Management of oil windfalls in Mexico : historical experience and policy options for the future," Policy Research Working Paper Series 2592, The World Bank.

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    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics


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