How Best to Use the Extraordinary Hydrocarbon Revenues in Bolivia: Results from a Computable General Equilibrium Model

Lykke E. Andersen ()

No 14/2006, Development Research Working Paper Series from Institute for Advanced Development Studies

Abstract: The high oil prices and the sharp increases in royalties mean that the natural gas boom in Bolivia has become very important for the economy, and particularly important as a source of government revenues. Using a CGE model, Andersen et al (2006) show that the natural gas boom is likely to boost GDP growth by about 1 percentage point per year. However, if the government continues with past spending and investment patterns, the boom is also likely to have a very adverse effect on the income distribution, so much so that the poorest half of the population is likely to experience absolute reductions in their real income levels compared to a scenario without gas boom. The present paper explores alternative uses of natural gas revenues in the CGE model to see if a better outcome can be engineered.

Keywords: Natural Gas; Inequality; CGE model; Bolivia (search for similar items in EconPapers)
JEL-codes: Q33 Q43 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cmp and nep-ene
Date: 2006-12
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Persistent link: http://EconPapers.repec.org/RePEc:adv:wpaper:200614

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