Dutch Disease: Applying the Budget Rule and the Role of Structural Reforms

The effect, which was generated by the discovery of gas fields in the Dutch province of Groningen, recurred subsequently often in other resource-rich economies. Following a brief excursion into the theory this article considers the approaches to smoothing the “sharp edges” through accumulation of sovereign wealth funds and application of fiscal rules. Chile demonstrates the example of tough countercyclicality, Norway with its social priorities allows moderate procyclicality in spending of oil revenues. Russia tended more toward the latter of these examples in its efforts to overcome the Groningen effects. However, now when the hard landing of the past years gave a unique chance for the structural transformation it is extremely important not to miss it. On the far horizons the structural policies are of crucial importance. Even Saudi Arabia with all peculiarity of its socio-economic mode came to a clear understanding of the necessity and inevitability of structural reforms.