We provide a growth model with imported resources and foreign debt accumulation providing the basis for two questions and regression equations. 1) Under what conditions do growth rates of per capita income remain positive if imported inputs such as oil have increasing real prices? 2) Is accumulation of foreign debt driven by a current account deficit of which two percent of the GDP stem from oil imports, sustainable? For both questions we provide estimates for the USA with the following results. Oil price growth rates have only a marginal impact on those of GDP per capita as long as they exceed inflation rates by not much more than they did in the past. The US foreign debt/GDP ratio follows an unstable difference equation and therefore is not sustainable. We briefly discuss possible future stabilization through the market and through policies.
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Paper provided by United Nations University, Maastricht Economic and social Research and training centre on Innovation and Technology in its series UNU-MERIT Working Paper Series with number
028.
Find related papers by JEL classification: F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
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