The curse reversed: resource dependence and recessions in the United States

James Flynn

Economics Bulletin, 2022, vol. 42, issue 3, 1295 - 1304

Abstract: The relationship between natural resources and economic development is one of the most perplexing questions in economics, with many seemingly contradictory results. In this paper, I offer a new explanation for why resources appear to be beneficial in some circumstances but detrimental in others by showing that the so-called ‘resource curse' is not constant across time and is in fact linked with the business cycle in the United States. I show that while resources are generally associated with slower growth, this relationship flips during recessionary periods. Additionally, while the overall negative relationship between resources and growth can be explained by commodity prices and `resource drag', the positive relationship which appears during periods with many quarters of negative growth is robust and even spills over onto non-resource sectors.

Keywords: Resource curse; Economic growth; Business cycles (search for similar items in EconPapers)
JEL-codes: O1 Q0 (search for similar items in EconPapers)
Date: 2022-09-30
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