Efficient consumption of revenues from natural resources – An application to Norwegian petroleum revenues
AbstractThis paper addresses the so-called natural resource curse by devising a rule that can reduce macroeconomic costs associated with the consumption of revenues from natural resources. It assumes that such macroeconomic costs are mainly brought about by changes in the real exchange rate, which adjusts in order to maintain external balance. Thus it derives a consumption rule, denoted as the efficient consumption rate, that would make the behaviour of the real exchange rate mimic that of the real exchange rate in the absence of natural resources. Accordingly, growth of exports and imports of traditional goods and services, and implicitly the sectoral composition of the economy, become largely immune to the consumption of natural resources. The theoretical framework is applied to estimate and evaluate an efficient consumption rate for Norway’s sizeable petroleum revenues.
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Bibliographic InfoPaper provided by Norges Bank in its series Working Paper with number 2005/1.
Length: 30 pages
Date of creation: 01 Mar 2005
Date of revision:
Natural resources; Dutch disease; real exchange rate.;
Find related papers by JEL classification:
- Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
- F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
- F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-03-06 (All new papers)
- NEP-ENE-2005-03-06 (Energy Economics)
- NEP-ENV-2005-03-06 (Environmental Economics)
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