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Spending natural resource revenues in an altruistic growth model

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  • FREDERIKSEN, ELISABETH HERMANN

Abstract

This paper examines how natural resource revenues interact with growth and welfare in an overlapping generations model with altruism. The revenues are allocated between public productive services and direct transfers to members of society by spending policies. We analyze how these policies influence the dynamics, and how the dynamics are influenced by the revenue. Abundant revenues may harm growth, but growth and welfare can be oppositely affected. We also provide the social planner solution under which revenues enhance growth. Overall, the analysis suggests that variation in the strength of altruism and in spending policies may be part of the reason why natural resources seem to affect economic performance across nations differently.

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  • Frederiksen, Elisabeth Hermann, 2008. "Spending natural resource revenues in an altruistic growth model," Environment and Development Economics, Cambridge University Press, vol. 13(06), pages 747-773, December.
  • Handle: RePEc:cup:endeec:v:13:y:2008:i:06:p:747-773_00
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