The purpose of this contribution is to illustrate the mechanism by which higher oil prices might lead to lower interest rates in the context of a simple model that takes into account the global external savings equilibrium. The simple model has interesting implications for how one views the huge...

Recent empirical studies provide evidence that financial deepness or the lack thereof plays a significant role in the oil price-current account nexus for oil-exporting countries. While oil price fluctuations are known to negatively impact the current account positions of net oil-importing...

In several countries temporary terms of trade improvements have led to a deterioration of the current account. Furthermore, many of these countries failed to attain greater post-boom growth rates. The point we make is that the structure of the fiscal process is critical in determining outcomes....