Spending Natural Resource Revenues in an Altruistic Growth Model

Elisabeth Hermann Frederiksen
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Elisabeth Hermann Frederiksen: Department of Economics, University of Copenhagen

No 06-09, EPRU Working Paper Series from Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics

Abstract: This paper examines how revenues from a natural resource interact with growth and welfare in an overlapping generations model with altruism. The revenues are allocated between public productive services and direct transfers to members of society by spending policies. We analyze how these policies influence the dynamics, and how the dynamics are influenced by the abundance of the revenue. Abundant revenues may harm growth, but growth and welfare can be oppositely affected. We also provide the socially optimal policy. Overall, the analysis suggests that variation in the strength of altruism and in spending policies may be part of the reason why natural resources seem to affect economic performance across nations differently.

Keywords: natural resources; economic growth; welfare; altruism (search for similar items in EconPapers)
JEL-codes: D64 O41 Q33 Q38 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2006-09
New Economics Papers: this item is included in nep-agr, nep-dge, nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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