Optimal policy rules in an export-oriented economy

Master Thesis by Maria Atamanchuk
July 16, 2007


Research is determined by the necessity of finding the set of optimal feedback coefficients
of fiscal and monetary policies within an export-oriented economy with emphasis on the oil
industry such as Russia. To address this issue we build the open economy general equilibrium
model that can be seen as RBC model augmented with some additional features. As a benchmark
we take the model of Schmitt-Grohe and Uribe (2004). We expand their model by including the
external sector, non-producing oil sector and a fund for accumulating the huge revenues from oil
export to our analysis. We calibrate the economy for the case of Russia. Our main findings are:
under oil price shock optimal monetary policy rule features a significant response to output; the
coefficient of nominal interest rate varies significantly for different shocks; considering
stabilization fund under passive fiscal policy with liability targeting each value of liability
targeting coefficient could either produce no deviation from steady state given any value of
inflation feedback coefficient or cause a deviation which is exactly the same.