Asymmetric transmission and effects of resource shocks: Case of Mongolia

This paper contributes to the empirical evidence on Dutch disease by studying the transmission of resource shocks in Mongolia. Asymmetric resource shock transmissions adjusted for the business cycle stage were estimated using a Markov Switching Vector Autoregression model (VAR) and data from 2000Q1 to 2019Q4. The results of these and additional estimates employing recursive and non-recursive VAR models found evidence of a positive technological spillover effect from the resource sector on the Mongolian economy. However, it is evident that the main source of economic volatility is from the mining sector.