Efficient consumption of revenues from natural resources – An application to Norwegian petroleum revenues

Qaisar Akram

No 2005/1, Working Paper from Norges Bank

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.

Keywords: Natural resources; Dutch disease; real exchange rate. (search for similar items in EconPapers)
JEL-codes: F17 F41 F47 Q38 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2005-03-01
New Economics Papers: this item is included in nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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