Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/209848
Authors: 
Akram, Q. Farooq
Year of Publication: 
2005
Series/Report no.: 
Working Paper No. 2005/1
Abstract: 
This paper addresses the so-called natural resource curse by devising a rule that can reduce macroeconomic costs associated with the consumption of revenues from natural resources. It assumes that such macroeconomic costs are mainly brought about by changes in the real exchange rate, which adjusts in order to maintain external balance. Thus it derives a consumption rule, denoted as the efficient consumption rate, that would make the behaviour of the real exchange rate mimic that of the real exchange rate in the absence of natural resources. Accordingly, growth of exports and imports of traditional goods and services, and implicitly the sectoral composition of the economy, become largely immune to the consumption of natural resources. The theoretical framework is applied to estimate and evaluate an efficient consumption rate for Norway's sizeable petroleum revenues.
Subjects: 
Dutch disease
natural resources
real exchange rate
JEL: 
Q38
F17
F41
F47
Persistent Identifier of the first edition: 
ISBN: 
82-7553-287-6
Creative Commons License: 
https://creativecommons.org/licenses/by-nc-nd/4.0/deed.no
Document Type: 
Working Paper
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