An Empirical Analysis of a Regional Dutch Disease: The case of Canada
AbstractWhile there has been extensive research on the Dutch Disease (DD) very little attention, if any, has been devoted to the regional mechanisms through which it may manifest itself. This is the first empirical attempt to research a 'regional DD' by looking at the local and spatial impacts of resource windfalls across Canadian provinces and territories. We construct a new panel dataset to examine separately the key DD channels; namely, the Spending Effect (SE) and the Resource Movement Effect (RME). Our analysis reveals that the standard DD mechanisms are also relevant at the regional level; specifically, we find that: (a) Resource windfalls are associated with higher inflation and a labor (capital) shift from (to) non-primary tradable sectors. (b) Resource windfalls in neighboring regions are associated with a capital (labor) shift from (to) non-primary tradable sectors in the sourc eregion. (c) The (spatial) DD explains (51%) 20% of the adverse effects of resource windfalls (in neighboring regions) on region-specific non-mineral international exports (in the source region), and does not significantly affect domestic ones.
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Bibliographic InfoPaper provided by Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford in its series OxCarre Working Papers with number 106.
Date of creation: 2013
Date of revision:
Regional Dutch Disease; Inflation; Exports;
Find related papers by JEL classification:
- F10 - International Economics - - Trade - - - General
- N92 - Economic History - - Regional and Urban History - - - U.S.; Canada: 1913-
- O18 - Economic Development, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
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