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Shocks and Shields: Macroeconomic Institutions During Commodity Price Swings

Author

Listed:
  • Mr. Rabah Arezki
  • Patrick A. Imam
  • Mr. Kangni R Kpodar

Abstract

Countries facing commodity (net) export price shocks tend to implement fiscal rules and to financially close their economies, demonstrating “macroeconomic prudence”. These effects are (unsurprisingly) asymmetric between import and export price shocks. The impact of commodity (net) export prices on macroeconomic institutions is influenced by the intensity of shocks and income levels of the countries, with higher-income countries driving the main results. These findings remain robust across various checks, including different estimators and additional control and dependent variables. These findings suggest that macroeconomic institutions are reactive to terms of trade shocks stemming from commodity price fluctuations.

Suggested Citation

  • Mr. Rabah Arezki & Patrick A. Imam & Mr. Kangni R Kpodar, 2025. "Shocks and Shields: Macroeconomic Institutions During Commodity Price Swings," IMF Working Papers 2025/015, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2025/015
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