The increased demand for energy and other resources in global markets, particularly arising from therapidly developing economies of China and India, has resulted in considerable turbulence in resourceprices, and most obviously that of oil. The recent magnitude of change, both positive and negative, inresource prices and their macroeconomic implications is of considerable contemporary importance forboth resource importing and exporting economies. For a resource exporting economy, such as that ofAustralia, the resource price boom had a number of beneficial effects: increased government taxationrevenues, increased employment and higher wages in the resource and resource related sectors,increased spending in the domestic economy and buoyant economic growth, increased resource exportsto the booming economies of China and India and a stronger domestic currency with beneficial effectsupon inflation. On the other hand these developments are likely to have adverse effects on the nonresource sector that is subject to more competition for limited resources, a stronger exchange rateresults in a loss of international competitiveness and reduced exports, a loss of employment in the nonresource sector which is likely to be more labour intensive, and an eventual slow down in the overalleconomy. These positive and negative effects, and the overall impact of a resource price boom, willfundamentally require closer analysis of the structure of the economy under scrutiny. In this context thepolicy response by government is likely to be crucial in producing overall positive effects. Theobjective of this paper is to provide an analytical framework that can be utilised for a resourceexporting economy for this purpose.