Investment, the real exchange rate, and Dutch disease: A two-period general equilibrium model of Cameroon

摘要: Abstract This paper examines the structural adjustment problem of a developing country with finite foreign-exchange surplus and develops method evaluating choices among possible sectoral macroeconomic policies for such country. Traditional treatment this adjustment, commonly known as “Dutch disease,” considers composition output between traded nontraded goods but does not include trade-off consumption investment. study adds investment dimension by incorporating two-period optimization in multisectoral computable general equilibrium (CGE) model Cameroon. Unlike other CGE models, aggregate demand responds to factor prices driving decisions. The structure trade similarly respond forces, just relative prices. is used test impact foreign-capital inflow, tariff policy, policy toward public firms. Simulation results point out key role import substitutes, manufactures case. pattern response indicates that sector likely contract short run expand near future. However, firms, also producing are unlikely succeed an boom, even credit distribution biased their favor. Tariff protection raises price heightens demands, encourage domestic sector. On side, we note significantly greater interest rate on than savings. These conform empirical observation.