Energy and Resource Allocation: A Dynamic Model of the "Dutch Disease"
Deceased, Hebrew University
Jeffrey D. Sachs
Columbia University - Columbia Earth Institute; National Bureau of Economic Research (NBER)
NBER Working Paper No. w0852
It is well known that a domestic resource discovery gives rise to wealth effects that cause a squeeze of the tradeable good sector of an open economy. The decline of the manufacturing sector following an energy discovery has been termed the "Dutch disease," and has been investigated in many recent studies. Our model extends the principally static analyses to date by allowing for: (1 ) short-run capital specificity and long-run capital mobility; (2) inter- national capital flows; and (3) far-sighted intertemporal optimizing behavior by households and firms. The model is solved by numerical simulation.
Number of Pages in PDF File: 40working papers series
Date posted: April 22, 2004
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