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Natural resource dependence: a macroeconometric model for the United Arab Emirates

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  • Ajit Karnik
  • Cedwyn Fernandes

Abstract

This study constructs a macroeconometric model to analyse the problems of regions that exhibit dependence on nonrenewable resources (e.g. oil). The role of the oil sector in the UAE and the extent to which it subsidizes the rest of the economy is evaluated. The macroeconometric model constructed consists of four sectors, has 25 equations and is evaluated and calibrated employing dynamic simulation techniques. Counter-factual and policy experiments are carried out and the instruments-targets approach is used to analyse the impact of the oil sector. The article highlights the continued dependence of the UAE economy on oil and the urgency to diversify the economy and securing more nonhydrocarbon sources of revenue.

Suggested Citation

  • Ajit Karnik & Cedwyn Fernandes, 2009. "Natural resource dependence: a macroeconometric model for the United Arab Emirates," Applied Economics, Taylor & Francis Journals, vol. 41(9), pages 1157-1174.
    • Handle: RePEc:taf:applec:v:41:y:2009:i:9:p:1157-1174
    DOI: 10.1080/00036840601019109
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    References listed on IDEAS

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    1. David F. Hendry, 2002. "Forecast Failure, Expectations Formation and the Lucas Critique," Annals of Economics and Statistics, GENES, issue 67-68, pages 21-40.
    2. International Monetary Fund, 2005. "United Arab Emirates: Selected Issues and Statistical Appendix," IMF Staff Country Reports 2005/268, International Monetary Fund.
    3. International Monetary Fund, 2003. "United Arab Emirates: Selected Issues and Statistical Appendix," IMF Staff Country Reports 2003/067, International Monetary Fund.
    4. David F. Hendry, 2002. "Forecast Failure, Expectations Formation and the Lucas Critique," Annals of Economics and Statistics, GENES, issue 67-68, pages 21-40.
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    Cited by:

    1. Shahbaz, Muhammad & Ahmed, Khalid & Tiwari, Aviral Kumar & Jiao, Zhilun, 2019. "Resource curse hypothesis and role of oil prices in USA," Resources Policy, Elsevier, vol. 64(C).
    2. Nasser Al-Mawali & Haslifah Mohamad Hasim & Khalil Al-Busaidi, 2016. "Modeling the Impact of the Oil Sector on the Economy of Sultanate of Oman," International Journal of Energy Economics and Policy, Econjournals, vol. 6(1), pages 120-127.

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