Growth Recoveries (from Collapses)

2021 ◽  
Author(s):  
Juan Francisco Meneses ◽  
José Luis Saboin
Keyword(s):  
Exchange Rate ◽  
Natural Resource ◽  
Exchange Rate Regime ◽  
Democratic Accountability ◽  
Resource Rents ◽  
Financial Account ◽  
External Conditions ◽  
Economic Collapse ◽  
Low Levels ◽  
Natural Resource Rents

This paper analyzes the behavior of a long list of economic variables during episodes of recovery from an economic collapse. A set of stylized facts is proposed so as to depict what in this work is called \saygrowth recoveries. Through different estimation techniques, it is inferred under which conditions and policies the likelihood of experiencing a growth recovery increases. The results of the paper indicate that collapses tend to occur in countries with high dependence on natural resource rents, macroeconomic mismanagement, low levels of democratic accountability and rule of law and high levels of conflict. Recoveries, on the other hand, tend to be longer than collapses and are more likely to occur in contexts of: improved external conditions, less natural resource rents, balanced fiscal accounts, where the exchange rate corrects but within a more fixed exchange rate regime and a more restricted financial account, and where there are: rebounds in private consumption, increases in international trade and improvements on property rights.

scholarly journals ESSAYS ON THE DUTCH DISEASE

2021 ◽  
Author(s):  
Nazanin Behzadan
Keyword(s):  
Economic Growth ◽  
International Trade ◽  
Exchange Rate ◽  
Income Distribution ◽  
Foreign Aid ◽  
Natural Resource ◽  
Dutch Disease ◽  
Equal Distribution ◽  
Resource Rents ◽  
Natural Resource Rents

In this dissertation I analyze the effect of within-country income inequality on economic outcomes. I develop a new model of international trade with non-homothetic preferences whereby within-country income distribution affects the pattern of trade and economic growth. An appreciation of the real exchange rate inducing a production shift to the sector with less long-run growth potential is known as the Dutch disease and in this model the disease is triggered by within-country income differences. First, I show that the Dutch disease can arise solely from inequality in the distribution of natural resource rents where the country with the less equal distribution will have less production of manufacturing goods and less development of learning-by-doing in this sector. As opposed to conventional models, where income distribution has no effect on economic outcomes, an unequal distribution of the resource wealth can generate the Dutch disease. In addition, alternative forms of foreign transfers, such as foreign aid and remittances, interact with the income distribution in dissimilar manners and generate differences in spending patterns, the real exchange rate, production patterns, and the pattern of international trade. I show that while foreign aid can cause economic stagnation, remittances can in fact foster economic growth. I also provide a range of empirical tests of the theoretical model, including both difference and system GMM estimations in a dynamic panel setting and disentangle the effects of inequality and institutional quality. My empirical analyses support the hypothesis that inequality indeed plays a significant role in whether being resource-rich is a blessing or a curse for a country. The more unequal is the distribution of natural resource rents, the stronger is the disease. Moreover, I verify my hypothesis that foreign aid and remittances are not similar in generating the Dutch disease using data from a panel of countries and industries covering the years 1991-2009 while controlling for the issues of omitted variable bias and the endogeneity of the transfers. Finally, a similar method is used in order to draw empirical evidence that lends credence to the positive relation between more equal distribution of resource rents and higher manufacturing growth.

scholarly journals Good governance

2020 ◽  
Author(s):  
Somayeh Sedighi ◽  
Miklós Szanyi
Keyword(s):  
Exchange Rate ◽  
Natural Resources ◽  
Natural Resource ◽  
Good Governance ◽  
Development Rate ◽  
Resource Rents ◽  
Slow Development ◽  
Manufacturing Sectors ◽  
Natural Resource Rents ◽  
Rich Countries

Resource-rich countries experience a slow development rate in manufacturing sectors compared to countries with scarce resources. it has been a challenge to demystify the slow development in manufacturing sectors in those countries, therefore this study aimed to develop an efficient model to estimate the effects of good governance and natural resource rents on the performance of manufacturing export in countries endowed in natural resources. In this study world bank data for the year, 2000 to 2016 and the panel data model from 14 countries rich in natural resources were used alongside the six dependent variable indices including good governance, natural resource rents, real exchange rate, and gross domestic product (GDP). The results revealed that an increase in natural resources (NR), rule of low (RL), control of corruption (CC) as well as a reduction in inflation (INF) in countries under investigation will lead to increase in Manufacturing export. As well as an increase in Real Exchange Rate (RER) will lead to a reduction in the Manufacturing export of these countries. Hence demystify the slow development rate in manufacturing sectors in resource-rich countries.

scholarly journals ESSAYS ON THE DUTCH DISEASE

2021 ◽  
Author(s):  
Nazanin Behzadan
Keyword(s):  
Economic Growth ◽  
International Trade ◽  
Exchange Rate ◽  
Income Distribution ◽  
Foreign Aid ◽  
Natural Resource ◽  
Dutch Disease ◽  
Equal Distribution ◽  
Resource Rents ◽  
Natural Resource Rents

In this dissertation I analyze the effect of within-country income inequality on economic outcomes. I develop a new model of international trade with non-homothetic preferences whereby within-country income distribution affects the pattern of trade and economic growth. An appreciation of the real exchange rate inducing a production shift to the sector with less long-run growth potential is known as the Dutch disease and in this model the disease is triggered by within-country income differences. First, I show that the Dutch disease can arise solely from inequality in the distribution of natural resource rents where the country with the less equal distribution will have less production of manufacturing goods and less development of learning-by-doing in this sector. As opposed to conventional models, where income distribution has no effect on economic outcomes, an unequal distribution of the resource wealth can generate the Dutch disease. In addition, alternative forms of foreign transfers, such as foreign aid and remittances, interact with the income distribution in dissimilar manners and generate differences in spending patterns, the real exchange rate, production patterns, and the pattern of international trade. I show that while foreign aid can cause economic stagnation, remittances can in fact foster economic growth. I also provide a range of empirical tests of the theoretical model, including both difference and system GMM estimations in a dynamic panel setting and disentangle the effects of inequality and institutional quality. My empirical analyses support the hypothesis that inequality indeed plays a significant role in whether being resource-rich is a blessing or a curse for a country. The more unequal is the distribution of natural resource rents, the stronger is the disease. Moreover, I verify my hypothesis that foreign aid and remittances are not similar in generating the Dutch disease using data from a panel of countries and industries covering the years 1991-2009 while controlling for the issues of omitted variable bias and the endogeneity of the transfers. Finally, a similar method is used in order to draw empirical evidence that lends credence to the positive relation between more equal distribution of resource rents and higher manufacturing growth.

Impact of external currency exposures on macroeconomic policies

2020 ◽  
pp. 23-40
Author(s):  
I. V. Prilepskiy
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Positive Impact ◽  
Exchange Rate Regime ◽  
Macroeconomic Policies ◽  
Panel Regressions ◽  
Financial Account ◽  
Currency Exposure ◽  
Cross Country ◽  
The Impact

Based on cross-country panel regressions, the paper analyzes the impact of external currency exposures on monetary policy, exchange rate regime and capital controls. It is determined that positive net external position (which, e.g., is the case for Russia) is associated with a higher degree of monetary policy autonomy, i.e. the national key interest rate is less responsive to Fed/ECB policy and exchange rate fluctuations. Therefore, the risks of cross-country synchronization of financial cycles are reduced, while central banks are able to place a larger emphasis on their price stability mandates. Significant positive impact of net external currency exposure on exchange rate flexibility and financial account liberalization is only found in the context of static models. This is probably due to the two-way links between incentives for external assets/liabilities accumulation and these macroeconomic policy tools.

Foreign Capital, Natural Resource Rents and Financial Development: A New Approach

2020 ◽  
pp. 097215092096136
Author(s):  
Muhammad Shahbaz ◽  
Mohammad Ali Aboutorabi ◽  
Farzaneh Ahmadian Yazdi
Keyword(s):  
Financial Development ◽  
Natural Resource ◽  
Capital Accumulation ◽  
Foreign Capital ◽  
New Approach ◽  
Resource Rents ◽  
Long Run ◽  
Natural Resource Rents ◽  
Rich Countries ◽  
The Impact

This article explores the impact of financial development on the ‘natural resources rents–foreign capital accumulation nexus’ in selected natural resource–rich countries during 1970Q1–2016Q4. In doing so, we propose a new approach by applying the autoregressive distributed lag (ARDL) rolling regression technique for our empirical purpose. The results show that financial development has a positive and significant effect on the way natural resource rents affect foreign capital in the case of Australia, Chile, Ecuador, Egypt and Peru in both the short run and the long run. We achieve the same results in the case of Colombia and Iran too, but just in the long run. Also, short-term and long-term negative effects of financial development on the rents–foreign capital nexus are witnessed just in the case of Algeria. We provide some empirical evidence for further robustness of our findings. Finally, we suggest that there is a necessity for the development of the financial system in natural resource–rich countries to reach higher levels of foreign capital, which has a crucial role in their economic growth.

Natural resource rents, political regimes and terrorism in Africa

2020 ◽  
Vol 162 ◽  
pp. 50-66 ◽  
Author(s):  
Kazeem B. Ajide ◽  
Juliet I. Adenuga ◽  
Ibrahim D. Raheem
Keyword(s):  
Natural Resource ◽  
Political Regimes ◽  
Resource Rents ◽  
Natural Resource Rents

Nigerian Governance Challenge: Exploring the Role of Natural Resource Rents

2020 ◽  
Vol 12 (3) ◽  
pp. 335-358
Author(s):  
Fisayo Fagbemi ◽  
Grace Omowumi Adeoye
Keyword(s):  
Natural Resource ◽  
Good Governance ◽  
Political Commitment ◽  
Causality Test ◽  
Resource Rents ◽  
Long Run ◽  
Short Run ◽  
Resource Wealth ◽  
Natural Resource Rents ◽  
Natural Resource Wealth

Nigeria is a glaring example of a country where weak public institutions are pervasive in spite of its huge natural resource wealth. The presence of natural resource abundance has exacerbated the overwhelming development challenge in the economy. While the upshot of most empirical findings of the resource impact covers how the growth path is determined through the channel of institutions, the question as to why resource rents often fail to stimulate improved governance is more critical than ever. Hence, the study examines the effect of natural resource rents on the quality of governance in Nigeria for the period 1984–2017, using ARDL bounds test approach, Dynamic Least Squares (DOLS), and Granger Causality test based on Vector Error Correction Model (VECM). Results reveal that natural resource rents have an insignificant effect on governance indicators in the long-run as well in the short-run, suggesting that natural resource windfalls have a shallow effect on the development of good governance. However, further evidence indicates that pervasive institutional gaps in Nigeria could be stimulated or caused by the overdependence on natural resource rents and entrenched mismanagement tendencies. Thus, the study suggests that maintaining strong political commitment, curtailing overdependence on natural resources, and ensuring sound management of natural resource wealth are central for improved governance.

No taxation, no representation: An investigation of the relationship between natural resources and fiscal decentralization

2018 ◽  
Vol 36 (7) ◽  
pp. 1234-1255
Author(s):  
Mohammad Arzaghi ◽  
Andrew Balthrop
Keyword(s):  
Natural Resources ◽  
Natural Resource ◽  
Local Governments ◽  
Central Government ◽  
Fiscal Decentralization ◽  
Government Expenditures ◽  
Government Control ◽  
Resource Rents ◽  
Natural Resource Rents ◽  
The Relationship

Rents from natural resources can alter the relationship between central and local governments by providing a new source of government financing. We develop a model to explore the relationship between fiscal decentralization and resource abundance. Our model indicates that natural resource rents can detach central government expenditures from the tax base so that the central government can spend more to persuade a fractious periphery to remain under central government control. Thus, other things being equal, higher natural resource rents can result in less decentralized government expenditures. We empirically explore the relationship between fiscal decentralization and natural resource rents using a panel of 60 countries over the past 40 years. Empirical results support our economic model: A 1% increase in natural resource rents as a fraction of gross domestic product results in government expenditures that are 0.53% less decentralized.

Nexus between total natural resource rents and public debt in resource-rich countries:A panel data analysis

2021 ◽  
Vol 74 ◽  
pp. 102276
Author(s):  
Gideon Minua Kwaku Ampofo ◽  
Cheng Jinhua ◽  
Philip Chukwunonso Bosah ◽  
Edwin Twum Ayimadu ◽  
Patrick Senadzo
Keyword(s):  
Data Analysis ◽  
Panel Data ◽  
Natural Resource ◽  
Public Debt ◽  
Panel Data Analysis ◽  
Resource Rents ◽  
Natural Resource Rents
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