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

Author

Listed:
  • Kristina V. Shvandar

    (Financial Research Institute, Moscow 127006, Russia)

  • Vsevolod Y. Cherkasov

    (The Central Bank of the Russian Federation, Moscow 107016, Russia)

  • Tatiana F. Burova

    (Financial Research Institute, Moscow 127006, Russia)

Abstract

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.

Suggested Citation

  • Kristina V. Shvandar & Vsevolod Y. Cherkasov & Tatiana F. Burova, 2017. "Dutch Disease: Applying the Budget Rule and the Role of Structural Reforms," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 5, pages 20-32, October.
    • Handle: RePEc:fru:finjrn:170502:p:20-32
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    budgetary rule; Dutch disease; stabilization fund; effective exchange rate; fiscal policy;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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