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Taxation and Migration: Policies to Manage a Resource Boom

  • Ratbek Dzhumashev
  • Jaai Parasnis

The Australian economy is currently experiencing a resource boom and policy responses to this boom such as migration and taxation, as well as the broader role of monetary and fiscal policies are the subject of academic as well as public debate. This paper investigates the impact of a resource boom in a dynamic macroeconomic model, focusing on the allocation of resources across sectors and changes in income distribution. Further, the paper contributes to the current policy debate by analysing the role and effectiveness of government policy through its migration policy and taxation of the mining sector, in addressing the short run and steady state impacts of a resource boom. Results illustrate that while increased immigration is an appropriate short run response, long run welfare can be enhanced by higher taxation of the mining sector. Indeed, results show that increased tax revenue can fund appropriate transfers to mitigate the adverse effects on labour income and provision of public goods to increase productivity in the rest of the economy.

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File URL: http://www.buseco.monash.edu.au/eco/research/papers/2011/3311taxationmigrationdzhumashevparasnis.pdf
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Paper provided by Monash University, Department of Economics in its series Monash Economics Working Papers with number 33-11.

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Length: 33 pages
Date of creation: Dec 2011
Date of revision:
Handle: RePEc:mos:moswps:2011-33
Contact details of provider: Postal: Department of Economics, Monash University, Victoria 3800, Australia
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Web page: http://www.buseco.monash.edu.au/eco/Email:


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  1. Nitesh Saha & John Gilbert, 2004. "Immiserizing Growth in a Developing Economy Export Enclave," International Journal of Business and Economics, College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 3(3), pages 217-224, December.
  2. Matsen, Egil & Torvik, Ragnar, 2005. "Optimal Dutch disease," Journal of Development Economics, Elsevier, vol. 78(2), pages 494-515, December.
  3. Chi-Chur Chao & Bharat R. Hazari & Jean-Pierre Laffargue & Pasquale M. Sgro & Eden S. H. Yu, 2006. "Tourism, Dutch Disease And Welfare In An Open Dynamic Economy," The Japanese Economic Review, Japanese Economic Association, vol. 57(4), pages 501-515.
  4. Cassing, James H. & Warr, Peter G., 1985. "The distributional impact of a resource boom," Journal of International Economics, Elsevier, vol. 18(3-4), pages 301-319, May.
  5. Gregory, R.G., 1976. "Some Implications Of The Growth Of The Mineral Sector," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 20(02), August.
  6. Bharat R. Hazari & J. J. Nowak, 2003. "Tourism, Taxes And Immiserization: A Trade Theoretic Analysis," Pacific Economic Review, Wiley Blackwell, vol. 8(3), pages 279-287, October.
  7. John Freebairn & John Quiggin, 2010. "Special Taxation of the Mining Industry," Economic Papers, The Economic Society of Australia, vol. 29(4), pages 384-396, December.
  8. Frederick van der Ploeg, 2011. "Natural Resources: Curse or Blessing?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 366-420, June.
  9. Bharati Basu & Bharat Hazari, 2008. "Regional inequality and immiserization," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 11(3), pages 201-213.
  10. Juin‐Jen Chang & Lee‐Jung Lu & Shih‐Wen Hu, 2011. "Congestion Externalities of Tourism, Dutch Disease and Optimal Taxation: Macroeconomic Implications," The Economic Record, The Economic Society of Australia, vol. 87(276), pages 90-108, March.
  11. Anderson, Kym, 1998. "Are resource-abundant economies disadvantaged?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 42(1), March.
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