Preventing the Dutch Disease: The case of Indonesia

Thesis/Dissertation · Wed Jan 01 04:00:00 EST 1992

OSTI ID:5413729

Ramli, R

Indonesia has been more successful than other oil exporters in mitigating the effects of the Dutch Disease, the decline in non-oil production associated with an oil boom. Typically sharp increases in oil revenues promote the accumulation of international reserves, increasing monetization, and raising prices of non-traded relative to traded goods. The latter causes contraction of output and employment in the traded sector. This study analyzes the magnitude of the boom and its fiscal, monetary, and production effects. Proxies of the real exchange rate, defined as the relative price of traded to non-traded goods, were constructed. The effect of the exchange rate on the Dutch Disease problems were examined. The movement of the real exchange rate and the remarkable growth of production of traded goods indicate that the effects of the Dutch Disease on the Indonesian economy were remarkably limited. Structural and policy-induced factors, such as exchange rate protection and micro interventions, that mitigated the anticipated effects of the Dutch Disease are examined.

• Research Organization: Boston Univ., MA (United States)
• OSTI ID: 5413729
• Country of Publication: United States
• Language: English

Related Subjects

02 PETROLEUM
020700 -- Petroleum-- Economics
Industrial
& Business Aspects
29 ENERGY PLANNING, POLICY, AND ECONOMY
290200 -- Energy Planning & Policy-- Economics & Sociology
294002* -- Energy Planning & Policy-- Petroleum
ASIA
DEVELOPING COUNTRIES
ECONOMIC ANALYSIS
ECONOMICS
FOREIGN EXCHANGE RATE
INDONESIA
INDUSTRY
ISLANDS
PETROLEUM INDUSTRY
PRODUCTION
TRADE