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Oil Prices and Real Exchange Rate Movements in Oil-Exporting Countries: The Role of Institutions

Year: 2009

Type: preprint

Abstract: Political and legal institutions affect the extent to which the real exchange rates of oil-exporting countries co-move with the oil price. In a simple theoretical model, strong institutions insulate real exchange rates from oil price volatility by generating a smooth pattern of fiscal spending over the price cycle. Empirical tests on a panel of 33 oil-exporting countries provide evidence that countries with high bureaucratic quality and strong and impartial legal systems have real exchange rates that co-move less with the oil price.

Source: RePEc: Research Papers in Economics

Author: Johanna Rickne

Institution: Research Institute of Industrial Economics

Language: English

Topic: Market Dynamics and Volatility

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: green

OpenAlex ID: W1584772717

Cites: 41

Cited by: 22

Related to: 10