Alternative Explanation for the Resource Curse : The Income Effect Channel.
Title:
Alternative Explanation for the Resource Curse : The Income Effect Channel.
Author:
Alichi, Ali.
ISBN:
9781451916898
Personal Author:
Physical Description:
1 online resource (26 pages)
Series:
IMF Working Papers
Contents:
Contents -- I. Introduction -- II. A Simple Model -- A. Closed Economy -- B. Openness and Resource Curse -- C. Altruism and Resource Curse -- III. Empirical Investigation -- A. Empirical Methodology -- B. Results -- IV. Conclusion -- Tables -- 1. Composition of Government Expenditures in Oil Exporting -- 2. Growth Regressions -- 3. Growth Regressions using Restrictions on Trade and Capital Flows -- Figures -- 1. Non-Hydrocarbon GDP Growth and Government Current Spending -- 2. Transition Paths -- 3. Resource Curse Channels -- Appendices -- A. Data -- B. Testing for Whether a Higher Degree of Altruism Dampens the Adverse Effect of Government Current Spending on Non-Hydrocarbon GDP Growth -- C. Regional integration of two large open economies -- Appendix Tables -- 4. Data Description -- 5. Descriptive Statistics -- 6. List of Countries Included in the Sample -- 7. Growth Regressions using Regional Dummies -- References.
Abstract:
The paper provides an alternative explanation for the "resource curse" based on the income effect resulting from high government current spending in resource rich economies. Using a simple life cycle framework, we show that private investment in the non-resource sector is adversely affected if private agents expect extra government current spending financed through resource sector revenues in the future. This income channel of the resource curse is stronger for countries with lower degrees of openness and forward altruism. We empirically validate these findings by estimating non-hydrocarbon sector growth regressions using a panel of 25 oil-exporting countries over 1992-2005.
Local Note:
Electronic reproduction. Ann Arbor, Michigan : ProQuest Ebook Central, 2017. Available via World Wide Web. Access may be limited to ProQuest Ebook Central affiliated libraries.
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