ONLINE SEMINAR: Dutch Disease, Unemployment and Structural Change Seminar

Seminar
This event has now finished.
  • Date and time: Wednesday 21 February 2024, 1pm to 2pm
  • Location: Online only
  • Audience: Open to staff, students
  • Admission: Free admission, booking not required

Event details

Speaker: Francesco Zanetti (Oxford)

Abstract: We build a multi-sector, open economy model that captures the effects of a commodity boom on unemployment when there is also ongoing structural change. We use Bayesian methods to jointly estimate transition path effects of structural change and business cycle dynamics. Applying our model to the Australian economy, the estimates suggest that the large, permanent increase in commodity prices of the 2000s is critical for the observed appreciation of the real exchange rate and the contraction of net exports. Consistent with Dutch disease, the commodity boom increases unemployment in the short run. But structural change in the form of shifting preferences over non-tradable consumption and non-tradable employment, a process somewhat akin to structural transformation, explains the long-run reduction in unemployment, the increasing importance of the non-tradable sector for aggregate fluctuations and the increasing responsiveness of the tradable sector to shocks.

Keywords: Dutch disease, commodity prices, unemployment, structural change, structural transformation.

 (joint with Mariano Kulish, James Morley and Nadine Yamout).

Host: Omid Eskandari (York)