International Journal of Finance and Economics - Macroeconomics and Macroprudential Policies in an Oil-Exporting Economy

Generally, one of the main problems of the oil-exporting economies is their budget dependence on oil revenues, which increases government expenditure during a positive oil shock and usually imposes a considerable budget deficit in time of a negative oil shock. Consequently, these fluctuations lead to macroeconomic instability and, due to the macro-financial linkages, jeopardize the stability of the financial sector. As a result, the way to achieve sustainable growth, which fosters the creation of employment and the formation of capital, has been faced with major disruptions for these economies. In this research, it is shown that how the application of macroeconomic stabilization policies and macroprudential instruments can reduce the adverse effects of oil-revenue fluctuations on the stability of the real sector and the financial sector in such economies.