Oil Stock Discovery and Dutch Disease
AbstractWe set out a model of a two-good, small open economy exporting a traditional exportable in order to �finance capital goods rental payments. We observe that the traditional export sector declines with an exogenous increase in the country's oil export earnings, while the local goods sector expands. For input price effects to emerge, land is needed as a third input. For the "large land" case, we can have imports of capital steadily decline as oil earnings expand. Earnings from oil sales are stationary under our annuitization construction.
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Bibliographic InfoPaper provided by Queen's University, Department of Economics in its series Working Papers with number 1220.
Length: 21 pages
Date of creation: Nov 2009
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-2009-11-14 (All new papers)
- NEP-ENE-2009-11-14 (Energy Economics)
- NEP-OPM-2009-11-14 (Open Economy Macroeconomics)
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