Topic: Dutch Disease, Unemployment and Structural Change
Speaker: Nadine Yamout (American University of Beirut)
Time & venue:
Fridays, 10:00 - 12:00 (starting on 27.10.2023); see schedule for seminar venues
The Research Seminar in Economics offers a platform for invited speakers to present their current research, thereby promoting the exchange between speakers and faculty members. It covers empirical as well as theoretical contributions across all fields of economics.
More information can be found on the seminar's website.
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.