%0 Report
%A Sáez, Francisco J.
%A Puch González, Luis Antonio
%T Trade shoks and aggregate fluctuations in an oil-exporting economy
%J Documentos de Trabajo del Instituto Complutense de Análisis Económico (ICAE)
%D 2003
%U https://hdl.handle.net/20.500.14352/64520
%X In this paper we analyze the role of trade shocks in shaping aggregate fluctuations in Venezuela from 1950 to 1995. To this end a stochastic general equilibriummodel of a small open economy whose main productive activity rests in the exports of a single basic product is specied. Shocks to the terms of trade whichare directly associated to oil price changes are modelled as a foreign transfer. Wefind that this approach gives predictions that are consistent with the time series properties of Venezuela when i) the income effect of consumption more thancompensates the substitution effect that generates the oil transfer and, ii) thereis imperfect capital mobility. In particular, our model specification captures theobserved patterns of the main aggregates after the oil resource boom of 1974.
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