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Spending Natural Resource Revenues in an Altruistic Growth Model

Author

Listed:
  • Elisabeth Hermann Frederiksen

    (Department of Economics, University of Copenhagen)

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.

Suggested Citation

  • Elisabeth Hermann Frederiksen, 2006. "Spending Natural Resource Revenues in an Altruistic Growth Model," EPRU Working Paper Series 06-09, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    • Handle: RePEc:kud:epruwp:06-09
    as

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    File URL: http://web.econ.ku.dk/eprn_epru/Workings_Papers/wp-06-09.pdf
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    References listed on IDEAS

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    Cited by:

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    More about this item

    Keywords

    natural resources; economic growth; welfare; altruism;
    All these keywords.

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)

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