Effects of an oil boom on a small oil-exporting country: the case of Indonesia

Thesis/Dissertation · Wed Jan 01 04:00:00 EST 1986

OSTI ID:6566284

Pangestu, M E

The quadrupling of oil prices in 1973 and in subsequent years provided windfall revenues to the small net oil exporting countries such as Indonesia. However, the sudden increase in oil revenues was accompanied by considerable adjustment problems related to the adsorption of the revenues into the domestic economy. The increased domestic spending put upward pressure on the price of nontraded goods and there was a decline in the price of nonoil traded goods relative to the price of nontraded goods. In turn, the change in relative prices led to resource movement from the nonoil traded goods sector to the nontraded goods sector. The deterioration of this sector has been referred to as the Dutch disease in the literature. The main objective of this dissertation is to model and test the Dutch disease effect for the case of Indonesia over the oil boom period, 1973-82. The model developed features nontraded and nonoil traded goods. The comparative static exercises show that whether or not the price of nontraded goods increase depends on government and private spending on nontraded goods, gross substitution of goods, and whether or not the money supply is sterilized.

• Research Organization: California Univ., Davis (USA)
• OSTI ID: 6566284
• 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
ECONOMIC IMPACT
ECONOMICS
INCOME
INDONESIA
INDUSTRY
ISLANDS
MATHEMATICAL MODELS
OIL-EXPORTING COUNTRIES
PETROLEUM INDUSTRY
PRICES
TRADE