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Resource Windfalls, Macroeconomic Stability and Growth

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  • Kazim Kazimov
  • Kirk Hamilton
  • Rabah Arezki

Abstract

We use a new dataset on non-resource GDP to examine the performance of commodity-exporting countries in terms of macroeconomic stability and economic growth in a panel of up to 129 countries during the period 1970-2007. Our main findings are threefold. First, we find that overall government spending in commodity-exporting countries has been procyclical. Second, we find that resource windfalls initially crowd out non-resource GDP which then increases as a result of the fiscal expansion. Third, we find that in the long run resource windfalls have negative effects on non-resource sector GDP growth. Yet, the effects turn out to be statistically insignificant when controlling for government spending. Both the effects of resource windfalls on macroeconomic stability and economic growth are moderated by the quality of political institutions.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 11/142.

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Length: 25
Date of creation: 01 Jun 2011
Date of revision:
Handle: RePEc:imf:imfwpa:11/142

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Related research

Keywords: Fiscal policy; Economic growth; Agricultural exports; Developing countries; Energy; Fiscal stability; Governance; Government expenditures; Natural resources; government spending; political institutions; exporting countries; commodity-exporting countries; reer; exporters; commodity export; commodity exports; export price; energy exporters; political risk; export tariffs; real effective exchange rate; commodity exporters; value of exports; export structures; energy exports; energy exporting countries; export booms; capital flows; government policy; export price index;

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Citations

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Cited by:
  1. Frankel, Jeffrey A., 2012. "The Natural Resource Curse: A Survey of Diagnoses and Some Prescriptions," Working Paper Series, Harvard University, John F. Kennedy School of Government rwp12-014, Harvard University, John F. Kennedy School of Government.
  2. Alan H. Gelb & Arnaud Dupuy & Rabah Arezki, 2012. "Resource Windfalls, Optimal Public Investment and Redistribution," IMF Working Papers 12/200, International Monetary Fund.
  3. Ilham Haouas & Raimundo Soto, 2012. "Has the UAE Escaped the Oil Curse?," Documentos de Trabajo, Instituto de Economia. Pontificia Universidad Católica de Chile. 412, Instituto de Economia. Pontificia Universidad Católica de Chile..
  4. MASWANA, Jean-Claude & FAROOKI, Masuma, 2013. "African Economic Growth Prospects: A Resource Curse Perspective," Applied Econometrics and International Development, Euro-American Association of Economic Development, Euro-American Association of Economic Development, vol. 13(2), pages 169-182.
  5. Ahmadov, Ingilab & Mammadov, Jeyhun & Aslanli, Kenan, 2013. "Assessment of Institutional Quality in Resource-Rich Caspian Basin Countries," MPRA Paper 47430, University Library of Munich, Germany.
  6. Ibrahim Ahmed Elbadawi & Raimundo Soto, 2012. "Resource Rents, Political Institutions and Economic Growth," Documentos de Trabajo, Instituto de Economia. Pontificia Universidad Católica de Chile. 413, Instituto de Economia. Pontificia Universidad Católica de Chile..

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