Oil Wealth and Economic Behavior: The Case of Venezuela, 1965-81

60 Pages Posted: 15 Feb 2006

See all articles by Reza Vaez-Zadeh

Reza Vaez-Zadeh

International Monetary Fund (IMF)

Date Written: June 30, 1988


A short-run macroeconomic model is estimated for Venezuela, in order to examine the hypothesis that the availability of oil resources may entail a confidence effect--on perceived future incomes--that influences the expenditure and portfolio behavior of economic agents. Such confidence effect is found to be empirically significant. Model simulations reveal that the impact of oil price changes on the level and variability of money demand, balance of payments and inflation are significantly more pronounced in the presence of the confidence effect than in its absence. This has significant implictions for the size and structure of the needed policy interventions.

JEL Classification: 1210, 1226, 1320

Suggested Citation

Vaez-Zadeh, Reza, Oil Wealth and Economic Behavior: The Case of Venezuela, 1965-81 (June 30, 1988). IMF Working Paper No. 88/56, Available at SSRN: https://ssrn.com/abstract=884855

Reza Vaez-Zadeh (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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