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The Resource Curse and Fiscal Policy Volatility

  • Michael Bleaney
  • Håvard Halland
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    Using data from 1980 to 2004, we show that greater fiscal policy volatility acts as a transmission mechanism for the ‘resource curse’. Resource exports dominate political and institutional variables as determinants of fiscal policy volatility, with fiscal policy volatility being a significant determinant of growth. The existence of a resource curse is confirmed, in the sense that a higher ratio of natural resource exports to total merchandise exports is associated with significantly slower per capita GDP growth. There are no statistically significant differences between the effects of point-source and diffuse resource exports.

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    File URL: http://www.nottingham.ac.uk/credit/documents/papers/09-09.pdf
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    Paper provided by University of Nottingham, CREDIT in its series Discussion Papers with number 09/09.

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    Handle: RePEc:not:notcre:09/09
    Contact details of provider: Postal: School of Economics University of Nottingham University Park Nottingham NG7 2RD
    Phone: (44) 0115 951 5620
    Fax: (0115) 951 4159
    Web page: http://www.nottingham.ac.uk/economics/

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    1. Jonathan Isham & Michael Woolcock & Lant Pritchett & Gwen Busby, 2005. "The Varieties of Resource Experience: Natural Resource Export Structures and the Political Economy of Economic Growth," World Bank Economic Review, World Bank Group, vol. 19(2), pages 141-174.
    2. Frederick van der Ploeg & Steven Poelhekke, 2008. "Volatility, Financial Development and the Natural Resource Curse," OxCarre Working Papers 003, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    3. Francesco Caselli & Tom Cunningham, 2009. "Leader behaviour and the natural resource curse," Oxford Economic Papers, Oxford University Press, vol. 61(4), pages 628-650, October.
    4. Sachs, J-D & Warner, A-M, 1995. "Natural Resource Abundance and Economic Growth," Papers 517a, Harvard - Institute for International Development.
    5. Bleaney, Michael & Nishiyama, Akira, 2002. " Explaining Growth: A Contest between Models," Journal of Economic Growth, Springer, vol. 7(1), pages 43-56, March.
    6. Sachs, Jeffrey D. & Warner, Andrew M., 2001. "The curse of natural resources," European Economic Review, Elsevier, vol. 45(4-6), pages 827-838, May.
    7. Christa N. Brunnschweiler, 2006. "Cursing the blessings? Natural resource abundance, institutions, and economic growth," CER-ETH Economics working paper series 06/51, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    8. Garey Ramey & Valerie A. Ramey, 1994. "Cross-Country Evidence on the Link Between Volatility and Growth," NBER Working Papers 4959, National Bureau of Economic Research, Inc.
    9. Daron Acemoglu & Simon Johnson & James A. Robinson, 2000. "The Colonial Origins of Comparative Development: An Empirical Investigation," NBER Working Papers 7771, National Bureau of Economic Research, Inc.
    10. Sachs, Jeffrey D & Warner, Andrew M, 1997. "Sources of Slow Growth in African Economies," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 6(3), pages 335-76, October.
    11. Simon Guttmann & Anthony Richards, 2006. "Trade Openness: An Australian Perspective," Australian Economic Papers, Wiley Blackwell, vol. 45(3), pages 188-203, 09.
    12. Paul Cashin & Luis Felipe Céspedes & Ratna Sahay, 2003. "Commodity Currencies and the Real Exchange Rate," Working Papers Central Bank of Chile 236, Central Bank of Chile.
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