Oil Stock Discovery and Dutch Disease

John M. Hartwick and Kirk Hamilton

No 1220, Working Papers from Queen's University, Department of Economics

Abstract: We set out a model of a two-good, small open economy exporting a traditional exportable in order to …finance capital goods rental payments. We observe that the traditional export sector declines with an exogenous increase in the country's oil export earnings, while the local goods sector expands. For input price effects to emerge, land is needed as a third input. For the "large land" case, we can have imports of capital steadily decline as oil earnings expand. Earnings from oil sales are stationary under our annuitization construction.

Keywords: Dutch disease; resource discovery; invariant earnings (search for similar items in EconPapers)
JEL-codes: F43 Q33 Q32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene and nep-opm
Date: 2009-11
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Working Paper: Oil Stock Discovery and Dutch Disease (2008)
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