The Dutch Disease revisited: absorption constraint and learning by doing

Iacono, Roberto

The Dutch Disease revisited: absorption constraint and learning by doing

MPRA Paper from University Library of Munich, Germany

Abstract: This paper revisits the Dutch disease by analyzing the general equilibrium effects of a resource shock on a dependent economy, both in a static and dynamic setting. The novel aspect of this study is to incorporate two features of the Dutch disease literature that have only been analyzed in isolation from each other: capital accumulation with absorption constraint and productivity growth induced by learning by doing. The conventional result of long-run exchange rate appreciation is maintained in line with the Dutch Disease literature. In addition, a permanent change in the employment shares occurs after the resource windfall, in favor of the non-traded sector and away from the traded sector growth engine of the economy. In other words, in the long-run both of the classic symptoms of the Dutch Disease remain in place.

Keywords: Dutch; Disease.; Foreign; Exchange; Gift.; Endogenous; Growth.; Resource; wealth. (search for similar items in EconPapers)
JEL-codes: F43 O41 (search for similar items in EconPapers)
Date: 2014-11-07
New Economics Papers: this item is included in nep-gro and nep-opm
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Related works:
Journal Article: The Dutch disease revisited: absorption constraint and learning by doing (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:59684

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