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How Best to Use the Extraordinary Hydrocarbon Revenues in Bolivia: Results from a Computable General Equilibrium Model

Author

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  • Lykke E. Andersen

    (Institute for Advanced Development Studies)

Abstract

The high oil prices and the sharp increases in royalties mean that the natural gas boom in Bolivia has become very important for the economy, and particularly important as a source of government revenues. Using a CGE model, Andersen et al (2006) show that the natural gas boom is likely to boost GDP growth by about 1 percentage point per year. However, if the government continues with past spending and investment patterns, the boom is also likely to have a very adverse effect on the income distribution, so much so that the poorest half of the population is likely to experience absolute reductions in their real income levels compared to a scenario without gas boom. The present paper explores alternative uses of natural gas revenues in the CGE model to see if a better outcome can be engineered.

Suggested Citation

  • Lykke E. Andersen, 2006. "How Best to Use the Extraordinary Hydrocarbon Revenues in Bolivia: Results from a Computable General Equilibrium Model," Development Research Working Paper Series 14/2006, Institute for Advanced Development Studies.
    • Handle: RePEc:adv:wpaper:200614
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    References listed on IDEAS

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    1. Adams, Richard H, Jr, 1991. "The Economic Uses and Impact of International Remittances in Rural Egypt," Economic Development and Cultural Change, University of Chicago Press, vol. 39(4), pages 695-722, July.
    2. Lykke E. Andersen & Osvaldo Nina, 2007. "Geographical Constraints to Growth in Bolivia," Development Research Working Paper Series 05/2007, Institute for Advanced Development Studies.
    3. Lykke E. Andersen & Johann Caro & Robert Faris & Mauricio Medinaceli, 2006. "Natural Gas and Inequality in Bolivia after Nationalization," Development Research Working Paper Series 05/2006, Institute for Advanced Development Studies.
    4. Lykke Eg Andersen & Robert Faris, 2002. "Natural Gas and Income Distribution in Bolivia," Documentos de trabajo 1/2002, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana.
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    Cited by:

    1. François-Xavier de Mevius & Ivan Albarracin, 2008. "Bolivia and the Dutch Disease: What are the Risks and How to Avoid Them?," Documentos de trabajo 9/2008, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana.
    2. Christian Velasquez-Donaldson, 2007. "Analysis of the Hydrocarbon Sector in Bolivia: How are the Gas and Oil Revenues Distributed?," Development Research Working Paper Series 06/2007, Institute for Advanced Development Studies.
    3. Juan Antonio Morales, 2008. "Distribución Directa a las Personas de la Renta Hidrocarburífera: Impactos Macroeconómicos," Documentos de trabajo 7/2008, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana.

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    Keywords

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    JEL classification:

    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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