Sustainable growth and financial markets in a natural resource rich country

Emma Hooper ()
Additional contact information
Emma Hooper: _Aix-Marseille University (Aix-Marseille School of Economics), CNRS, & EHESS, http://www.amse-aixmarseille.fr/en/users/hooper

No 1510, AMSE Working Papers from Aix-Marseille School of Economics, France

Abstract: We study the optimal growth path of a natural resource rich country, which can borrow from international financial markets. More precisely, we explore to what extent international borrowing can overcome resource scarcity in a small open economy, in order to have sustainable growth. First, this paper presents a benchmark model with a constant interest rate. We then introduce technical progress to see if the economy's growth can be sustainable in the long-run. Secondly, we analyse the case of a debt elastic interest rate, with a constant price of natural resources and then with increasing prices. The main finding of this paper is that borrowing on international capital markets does not permit sustainable growth for a country with exhaustible natural resources, when the interest rate is constant. Nevertheless, when we endogenize the interest rate the consumption growth rate can be positive before declining.

Keywords: Exhaustible natural resources; exogenous growth; financial markets (search for similar items in EconPapers)
JEL-codes: E20 E44 O40 Q32 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2015-02-15
New Economics Papers: this item is included in nep-gro, nep-mac and nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.amse-aixmarseille.fr/sites/default/files/_dt/2012/wp_2015_-_nr_10.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aim:wpaimx:1510

Access Statistics for this paper

More papers in AMSE Working Papers from Aix-Marseille School of Economics, France AMU-AMSE - 5-9 Boulevard Maurice Bourdet, CS 50498 - 13205 Marseille Cedex 1. Contact information at EDIRC.
Bibliographic data for series maintained by Gregory Cornu ().