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Dutch Disease , factor mobility, and the Alberta Effect : the case of federations

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  • Ohad Raveh

Abstract

Do reduced costs of factor mobility mitigate Dutch Disease effects to the extent that they are reversed? The case of federations provides an indication they do. We observe resource blessing (curse) effects at the provincial (federal) level, and argue the difference in outcomes stems from the difference in factor mobility costs. We construct a simple tax competition model which shows that if factor mobility costs are sufficiently low, a resourceboom triggers an Alberta Effect that mitigates, and possibly reverses, Dutch Disease symptoms. The paper concludes with empirical evidence for the main implications of the model.

Suggested Citation

  • Ohad Raveh, 2013. "Dutch Disease , factor mobility, and the Alberta Effect : the case of federations," Canadian Journal of Economics, Canadian Economics Association, vol. 46(4), pages 1317-1350, November.
    • Handle: RePEc:cje:issued:v:46:y:2013:i:4:p:1317-1350
    DOI: 10.1111/caje.12050
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    JEL classification:

    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
    • R50 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - General

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