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The curse reversed: resource dependence and recessions in the United States

Author

Listed:
  • James Flynn

    (Miami University)

Abstract

The relationship between natural resources and economic development is one of the most perplexing questions in economics, with many seemingly contradictory results. In this paper, I offer a new explanation for why resources appear to be beneficial in some circumstances but detrimental in others by showing that the so-called ‘resource curse' is not constant across time and is in fact linked with the business cycle in the United States. I show that while resources are generally associated with slower growth, this relationship flips during recessionary periods. Additionally, while the overall negative relationship between resources and growth can be explained by commodity prices and `resource drag', the positive relationship which appears during periods with many quarters of negative growth is robust and even spills over onto non-resource sectors.

Suggested Citation

  • James Flynn, 2022. "The curse reversed: resource dependence and recessions in the United States," Economics Bulletin, AccessEcon, vol. 42(3), pages 1295-1304.
    • Handle: RePEc:ebl:ecbull:eb-22-00410
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    References listed on IDEAS

    as
    1. James, Alexander G. & James, Robert G., 2011. "Do resource dependent regions grow slower than they should?," Economics Letters, Elsevier, vol. 111(3), pages 194-196, June.
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    3. Richard Hornbeck & Pinar Keskin, 2015. "Does Agriculture Generate Local Economic Spillovers? Short-Run and Long-Run Evidence from the Ogallala Aquifer," American Economic Journal: Economic Policy, American Economic Association, vol. 7(2), pages 192-213, May.
    4. Bahar, Dany & Santos, Miguel A., 2018. "One more resource curse: Dutch disease and export concentration," Journal of Development Economics, Elsevier, vol. 132(C), pages 102-114.
    5. Smith, Brock, 2015. "The resource curse exorcised: Evidence from a panel of countries," Journal of Development Economics, Elsevier, vol. 116(C), pages 57-73.
    6. James, Alexander, 2015. "The resource curse: A statistical mirage?," Journal of Development Economics, Elsevier, vol. 114(C), pages 55-63.
    Full references (including those not matched with items on IDEAS)

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    JEL classification:

    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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