Oil Stock Discovery and Dutch Disease
AbstractWe set out a model of a small open economy exporting oil and a traditional exportable in return for produced capital. The small open economy also has local production of a non-traded good. We first observe that the size of the traditional export sector declines with an exogenous increase in the country's oil stock. Strong Dutch disease (SDD) involves a net diminution in produced capital in use in the small open economy after the oil discovery shock. SDD turns on the exportable sector being relatively capital intensive.
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Bibliographic InfoPaper provided by Queen's University, Department of Economics in its series Working Papers with number 1163.
Length: 11 pages
Date of creation: Mar 2008
Date of revision:
Dutch disease; resource discovery; invariant earnings;
Other versions of this item:
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
- Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
- Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-05-05 (All new papers)
- NEP-ENE-2008-05-05 (Energy Economics)
- NEP-OPM-2008-05-05 (Open Economy Macroeconomics)
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