Empirical Evaluation of the Symptoms of Dutch Disease in Recent Ecuadorian History (2007-2017)
Keywords:
Macroeconomy, Dutch disease, Empirical evaluation, Public politics, Oil BoomAbstract
The present research work develops a model of autoregressive vectors (VAR) to evaluate the hypothesis of Dutch disease in the Ecuadorian economy in the last decade based on the available historical data (2000-2017). The main symptoms of this economic phenomenon were analyzed empirically. The methodology used was a VAR model that collects the interactions between the main economic variables. The impulse response functions were estimated to measure the symptoms of the Dutch disease in Ecuador. The methodology allows to quantify the impact of the oil boom on the dynamics of the Ecuadorian economy. The results reaffirm the vulnerability of the national economic dynamics with respect to the volatility of oil revenues. It is estimated that the oil boom causes an income effect, since the oil bonanza has been a determining factor in explaining the country's economic growth, and an expenditure effect that led to an appreciation of the real exchange rate that discourages the activity of the tradable sector of the country. In addition, there are tensions on public finances through increased public spending and the trade balance due to the increase in imports, concluding that the oil boom caused fiscal and commercial imbalances in the country.
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