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Natural Resources Revenue Allocation: A Dynamic General Equilibrium Approach

Author

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  • Haqiqi, Iman
  • Aghanazari, Hasan
  • Sharzei, Gholamali

Abstract

The purpose of this paper is to investigate the economic impacts of inter-generational allocation of exhaustible natural resources. We quantify the potential impacts of implementing this on oil and gas revenues in Iran. We employ an overlapping-generations computable general equilibrium model which is calibrated based on the 2010 Iranian Micro Consistent Matrix. We assume an open economy with different sectors such as oil and gas, public services, and other activities. Assuming exhaustible resources, we measure the impact of different annual saving rates for the Resources Revenue on welfare, size of the public sector, activity levels, and exports. We find that investing the revenue of oil and gas in Iran, will lead to a 55% higher annual growth rate in the long-run.

Suggested Citation

  • Haqiqi, Iman & Aghanazari, Hasan & Sharzei, Gholamali, 2013. "Natural Resources Revenue Allocation: A Dynamic General Equilibrium Approach," MPRA Paper 95785, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:95785
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    File URL: https://mpra.ub.uni-muenchen.de/95785/1/MPRA_paper_95785.pdf
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    References listed on IDEAS

    as
    1. Jeffrey D. Sachs & Andrew M. Warner, 1995. "Natural Resource Abundance and Economic Growth," NBER Working Papers 5398, National Bureau of Economic Research, Inc.
    2. Xavier Sala-i-Martin & Arvind Subramanian, 2013. "Addressing the Natural Resource Curse: An Illustration from Nigeria," Journal of African Economies, Centre for the Study of African Economies, vol. 22(4), pages 570-615, August.
    3. John Hartwick, 1977. "Intergenerational Equity and the Investment of Rents from Exhaustible Resources in a Two Sector Model," Working Paper 281, Economics Department, Queen's University.
    4. Stijns, Jean-Philippe, 2006. "Natural resource abundance and human capital accumulation," World Development, Elsevier, vol. 34(6), pages 1060-1083, June.
    5. Corden, W M, 1984. "Booming Sector and Dutch Disease Economics: Survey and Consolidation," Oxford Economic Papers, Oxford University Press, vol. 36(3), pages 359-380, November.
    6. Auty, R. & Warhurst, A., 1993. "Sustainable development in mineral exporting economies," Resources Policy, Elsevier, vol. 19(1), pages 14-29, March.
    7. Hartwick, John M, 1977. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," American Economic Review, American Economic Association, vol. 67(5), pages 972-974, December.
    8. Ian Bannon & Paul Collier, 2003. "Natural Resources and Violent Conflict : Options and Actions," World Bank Publications - Books, The World Bank Group, number 15047, December.
    9. Thomas F. Rutherford & D. Sigrist, 2010. "What if? Policy analysis with calibrated equilibrium models," CEPE Working paper series 10-72, CEPE Center for Energy Policy and Economics, ETH Zurich.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Bahalou, Marziyeh & Haqiqi, Iman, 2016. "A General Equilibrium Model with Labor-Leisure and Domestic-Abroad Choice for Assessment of Labor Migration in a Small Open Economy," MPRA Paper 95863, University Library of Munich, Germany.
    2. Haqiqi, Iman & Bahalou, Marziyeh & Shamsaee, Arezoo, 2017. "An Economic General Equilibrium Model for Evaluation of Production Support Policies in Developing Countries," MPRA Paper 95865, University Library of Munich, Germany.
    3. Haqiqi, Iman & Yasharel, Sepideh, 2018. "Removing Fossil Fuel Subsidies to Help the Poor," MPRA Paper 95907, University Library of Munich, Germany.
    4. Haqiqi, Iman & Bahalou, Marziyeh & Hamidi, Razieh, 2014. "Measurement and Evaluation of Equality of Opportunity: A Numerical Look at Education, Health, and Income Inequality," MPRA Paper 95866, University Library of Munich, Germany.
    5. Aghababaei, Mohammad Ebrahim, 2019. "General Equilibrium Resource Elasticity in an Open Resource-Abundant Economy," MPRA Paper 97851, University Library of Munich, Germany.
    6. Haqiqi, Iman & Mirian, Narges, 2015. "A Financial General Equilibrium Model for Assessment of Financial Sector Policies in Developing Countries," MPRA Paper 95841, University Library of Munich, Germany.

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    More about this item

    Keywords

    Exhaustible Resources ; Inter-generational Justice; Size of Government; Computable General Equilibrium; Overlapping Generations;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)

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