IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/97851.html
   My bibliography  Save this paper

General Equilibrium Resource Elasticity in an Open Resource-Abundant Economy

Author

Listed:
  • Aghababaei, Mohammad Ebrahim

Abstract

This study investigates the sensitivity of macro and sectoral variables to natural resource revenues in a resource-abundant developing country. Here, different transmission mechanisms are in effect. The paper considers the exchange rate channel, financial sector channel, capital flow channel, public sector channel, and resource reallocation channel. I employ a large scale real-financial general equilibrium model with especial focus on fossil fuel energy, natural resources, financial sector interactions, inter-sectoral linkages, and public sector responses. The model is used to predict the likely changes in oil and gas exports in Iran. It causes more oil exports but at lower international prices. Our comparative static analysis indicates that resource elasticity for GDP is from +0.10 to +0.13; for public services is from +0.16 to +0.27; for import is from +0.42 to +0.45; for mineral extraction is from -0.50 to -0.10, and for the manufacturing sector is from -0.08 to -0.06. The simulation reveals extraction competition among natural resources.

Suggested Citation

  • Aghababaei, Mohammad Ebrahim, 2019. "General Equilibrium Resource Elasticity in an Open Resource-Abundant Economy," MPRA Paper 97851, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:97851
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/97851/1/MPRA_paper_97851.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Thorvaldur Gylfason, 2001. "Nature, Power and Growth," Scottish Journal of Political Economy, Scottish Economic Society, vol. 48(5), pages 558-588, November.
    2. Haqiqi , Iman & Bahalou Horeh , Marziyeh, 2013. "Macroeconomic Impacts of Export Barriers in a Dynamic CGE Model," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 8(3), pages 117-150, July.
    3. Haqiqi, Iman & Manzoor, Davood & Aghababaei, Mohammad, 2013. "Impacts of Electricity Efficiency Improvements on Factors Market: A Computable General Equilibrium Approach," MPRA Paper 95825, University Library of Munich, Germany.
    4. Asghar, Shahmoradi & Iman, Haqiqi & Zahedi, Raziyeh, 2011. "Impact Analysis of Energy Price Reform and Cash Subsidy Payment in Iran: A CGE Approach," MPRA Paper 95809, University Library of Munich, Germany.
    5. Gylfason, Thorvaldur, 2001. "Nature, Power, and Growth," Scottish Journal of Political Economy, Scottish Economic Society, vol. 48(5), pages 558-588, November.
    6. 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.
    7. Rutherford, Thomas F, 1999. "Applied General Equilibrium Modeling with MPSGE as a GAMS Subsystem: An Overview of the Modeling Framework and Syntax," Computational Economics, Springer;Society for Computational Economics, vol. 14(1-2), pages 1-46, October.
    8. Haqiqi, Iman & Mortazavi Kakhaki, Morteza, 2012. "The Impact of Redistribution of Opportunities on Income Inequality: A CGE Approach," MPRA Paper 95819, University Library of Munich, Germany.
    9. Robinson, James A. & Torvik, Ragnar & Verdier, Thierry, 2014. "Political foundations of the resource curse: A simplification and a comment," Journal of Development Economics, Elsevier, vol. 106(C), pages 194-198.
    10. Jesper Jensen & David Tarr, 2014. "Trade, Exchange Rate, and Energy Pricing Reform in Iran: Potentially Large Efficiency Effects and Gains to the Poor," World Scientific Book Chapters, in: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects, chapter 13, pages 307-326, World Scientific Publishing Co. Pte. Ltd..
    11. Haqiqi, Iman & Bahalou, Marziyeh, 2015. "A General Equilibrium Analysis of Unskilled Labor Entry and Skilled Labor Exit in Iran," MPRA Paper 95781, University Library of Munich, Germany.
    12. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685, December.
    13. Manzoor, Davood & Haqiqi, Iman & Aghababaei, Mohammad, 2013. "Economic Impacts of Investment in the Electricity Industry: A CGE Comparison of Regulated and Free Markets," MPRA Paper 95823, University Library of Munich, Germany.
    14. Mr. Carlos A Leite & Jens Weidmann, 1999. "Does Mother Nature Corrupt? Natural Resources, Corruption, and Economic Growth," IMF Working Papers 1999/085, International Monetary Fund.
    15. Davood, Manzoor & Asghar, Shahmoradi & Iman, Haqiqi, 2010. "An Assessment of the Impact of Reducing Implicit and Explicit Energy Subsidies in Iran; Using a Computable General Equilibrium Model Based on a Modified Micro Consistent Matrix," MPRA Paper 95808, University Library of Munich, Germany.
    16. 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.
    17. Haqiqi, Iman & Bahador, Ali, 2015. "Investigating Economic Effects of Oil Export Reduction: A Financial Computable General Equilibrium Approach," MPRA Paper 95784, University Library of Munich, Germany.
    18. 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.
    19. Davood, Manzoor & Mohammad, Aghababaei & Haqiqi, Iman, 2011. "Rebound Effects Analysis of Electricity Efficiency Improvements in Iran: A Computable General Equilibrium Approach," MPRA Paper 95810, University Library of Munich, Germany.
    20. Manzoor, Davood & Haqiqi, Iman, 2013. "Impacts of Energy Price Increase and Cash Subsidy Payments on Energy Demand," MPRA Paper 95826, University Library of Munich, Germany.
    21. Manzoor, Davood & Haqiqi, Iman, 2012. "Impact of Energy Price Reform on Environmental Emissions; A Computable General Equilibrium Approach," MPRA Paper 95818, University Library of Munich, Germany.
    22. Fardmanesh, Mohsen, 1991. "Dutch disease economics and oil syndrome: An empirical study," World Development, Elsevier, vol. 19(6), pages 711-717, June.
    23. Corden, W Max & Neary, J Peter, 1982. "Booming Sector and De-Industrialisation in a Small Open Economy," Economic Journal, Royal Economic Society, vol. 92(368), pages 825-848, December.
    24. Bruno Lanz & Thomas F Rutherford, 2016. "GTAPinGAMS: Multiregional and Small Open Economy Models," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 1(2), pages 1-77, December.
    25. Gharibnavaz, Mohammad Reza & Waschik, Robert, 2015. "Food and energy subsidy reforms in Iran: A general equilibrium analysis," Journal of Policy Modeling, Elsevier, vol. 37(5), pages 726-741.
    26. Gahvari Firouz & Taheripour Farzad, 2011. "Fiscal Reforms in General Equilibrium: Theory and an Application to the Subsidy Debate in Iran," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-54, June.
    27. Davood Manzoor & Asghar Shahmoradi & Iman Haqiqi, 2012. "An analysis of energy price reform: a CGE approach," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 36(1), pages 35-54, March.
    28. Haqiqi, Iman & Aghanazari, Hasan & Sharzei, Gholamali, 2013. "Natural Resources Revenue Allocation: A Dynamic General Equilibrium Approach," MPRA Paper 95785, University Library of Munich, Germany.
    29. Sachs, Jeffrey D. & Warner, Andrew M., 2001. "The curse of natural resources," European Economic Review, Elsevier, vol. 45(4-6), pages 827-838, May.
    30. 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.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Haqiqi, Iman & Yasharel, Sepideh, 2018. "Removing Fossil Fuel Subsidies to Help the Poor," MPRA Paper 95907, University Library of Munich, Germany.
    2. 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.
    3. Haqiqi, Iman & Manzoor, Davood, 2012. "Environmental Impacts of Phasing out Energy Subsidies," MPRA Paper 95688, University Library of Munich, Germany, revised 2016.
    4. 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.
    5. 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.
    6. 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.
    7. Barbier,Edward B., 2007. "Natural Resources and Economic Development," Cambridge Books, Cambridge University Press, number 9780521706513.
    8. Carpantier, J.-F. & Vermeulen, W.N., 2018. "Emergence of sovereign wealth funds," Journal of Commodity Markets, Elsevier, vol. 11(C), pages 1-21.
    9. Chekouri, Sidi Mohamed & Benbouziane, Mohamed & Chibi, Abderrahim, 2017. "Oil rents and institutional quality: empirical evidence from Algeria," MPRA Paper 81862, University Library of Munich, Germany, revised Sep 2017.
    10. Elissaios Papyrakis & Reyer Gerlagh, 2005. "Natural Resources, Innovation, and Growth," DEGIT Conference Papers c010_054, DEGIT, Dynamics, Economic Growth, and International Trade.
    11. Baena, César & Sévi, Benoît & Warrack, Allan, 2012. "Funds from non-renewable energy resources: Policy lessons from Alaska and Alberta," Energy Policy, Elsevier, vol. 51(C), pages 569-577.
    12. Elissaios Papyrakis, 2004. "Natural Resources, Innovation, and Growth," Working Papers 2004.129, Fondazione Eni Enrico Mattei.
    13. Michaels, Guy, 2010. "Challenges for research on resource-rich economies," LSE Research Online Documents on Economics 55256, London School of Economics and Political Science, LSE Library.
    14. Kaznacheev, Peter, 2013. "Resource Rents and Economic Growth: Economic and institutional development in countries with a high share of income from the sale of natural resources. Analysis and recommendations based on internatio," EconStor Research Reports 121950, ZBW - Leibniz Information Centre for Economics.
    15. Elwasila Saeed Elamin Mohamed, 2020. "Resource Rents, Human Development and Economic Growth in Sudan," Economies, MDPI, vol. 8(4), pages 1-21, November.
    16. Sidi Mohammed Chekouri & Abderrahim Chibi & Mohamed Benbouziane, 2017. "Algeria and the natural resource curse: oil abundance and economic growth," Middle East Development Journal, Taylor & Francis Journals, vol. 9(2), pages 233-255, July.
    17. Yilanci, Veli & Aslan, Murat & Ozgur, Onder, 2021. "Disaggregated analysis of the curse of natural resources in most natural resource-abundant countries," Resources Policy, Elsevier, vol. 71(C).
    18. Arvanitis, Yannis & Weigert, Maxime, 2017. "Turning resource curse into development dividends in Guinea-Bissau," Resources Policy, Elsevier, vol. 53(C), pages 226-237.
    19. Mentis, Alan & Moonsammy, Stephan, 2022. "A critical assessment of Guyana's sustainability pathway: Perspectives from a developing extractive economy," Resources Policy, Elsevier, vol. 76(C).

    More about this item

    Keywords

    General equilibrium; natural resources; Dutch Disease; trade; non-tariff barriers;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:97851. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.