An Empirical Test of the Dutch Disease Hypothesis using a Gravity Model of Trade

Although the core model of the Dutch Disease makes unambiguous predictions regarding the negative effect of a resource boom on a country’s manufacturing exports, the empirical literature that has followed has not clearly identified this effect. I attribute this to the failure of the existing literature to combine enough data to produce a sufficiently powerful and exogenous test. I will use the World Trade Database to systematically test this hypothesis in a gravity model of trade. World energy prices are used to bypass issues of endogeneity regarding primary exports. A one percent increase in world energy price is estimated to decrease a net energy exporter’s real manufacturing exports by almost half a percent. Similarly, after instrumentation, a one percent increase in an energy exporting country’s net energy exports is estimated decrease the country’s real manufacturing exports by 8 percent. The corresponding confidence intervals are tight and these results are shown to be quite robust.Dutch disease, resource booms, gravity model, manufacturing exports, energy, trade, industry.

Natural Resource Abundance and Human Capital Accumulation

This study examines indicators of human capital accumulation together with data for natural resource abundance and rents in a panel of 102 countries running from 1970 to 1999. Mineral wealth makes a positive and marked difference on human capital accumulation. Matching on observables reveals that cross-country results are not driven by a third factor such as overall economic development. Political stability does seem to affect both human capital accumulation and subsoil wealth, but not enough to overturn my conclusions. Instrumentation reveals that reverse causality running from education to natural resources does not drive the results. Estimation of a panel VAR indicates that, over the three decades, a $1 shock to resource rent generates five cents of extra educational expenditure per year. These results are consistent with Hirschman’s conjecture that enclave economies have weaker production leakages but stronger government revenue linkages than other activities. The “wealth channel” identified in this paper implies that caution should be exerted when discouraging countries from exploiting their mineral wealth, especially for countries where human capital is scarce.education, natural resources, resource booms, economic development

Natural Resource Abundance and Human Capital Accumulation

This study examines indicators of human capital accumulation together with data for natural resource abundance and rents in a panel of 102 countries running from 1970 to 1999. Mineral wealth makes a positive and marked difference on human capital accumulation. Matching on observables reveals that cross-country results are not driven by a third factor such as overall economic development. Political stability does seem to affect both human capital accumulation and subsoil wealth, but not enough to overturn my conclusions. Instrumentation reveals that reverse causality running from education to natural resources does not drive the results. Estimation of a panel VAR indicates that, over the three decades, a $1 shock to resource rent generates five cents of extra educational expenditure per year. These results are consistent with Hirschman's conjecture that enclave economies have weaker production leakages but stronger government revenue linkages than other activities. The "wealth channel" identified in this paper implies that caution should be exerted when discouraging countries from exploiting their mineral wealth, especially for countries where human capital is scarce.Labor and Human Capital, Resource /Energy Economics and Policy,

NATURAL RESOURCE ABUNDANCE AND ECONOMIC GROWTH REVISITED

Data on energy and mineral reserves suggest that natural resource abundance has not been a significant structural determinant of economic growth between 1970 and 1989. The story behind the effect of natural resources on economic growth is a complex one that typical growth regressions do not capture well. Preliminary evidence suggests that natural resources may affect economic growth through both "positive" and "negative channels." Potential reverse causality running from these "channels" to fuel and mineral reserves further complicates the analysis. I conjecture that, as economic historians suggest, the ability of a country to exploit its resource base depends critically on the nature of the learning process involved.International Development, Resource /Energy Economics and Policy,

Comptabilité générationnelle et vieillissement démographique : les enseignements d’un modèle d’équilibre général calculable calibré pour la Belgique

Dans la plupart des pays développés, un vieillissement démographique important s’annonce. À politique économique inchangée, ce vieillissement générera un accroissement important des charges supportées par les individus jeunes et actifs, présents et à venir, et donc une détérioration de la situation des générations futures. Dans ce débat, la comptabilité générationnelle d’Auerbach et al. (1991, 1994) et Kotlikoff (1992) occupe une place prépondérante. Elle permet, en effet, de comparer le bilan fiscal moyen des générations à venir avec la charge supportée par les générations actuelles. Nous proposons dans ce papier une extension immédiate de la comptabilité générationnelle d’Auerbach et al., qui consiste à estimer, de manière mécanique, la distribution de la charge léguée entre les générations futures. En supposant que la taxe sur les salaires équilibre le budget de l’État à chaque période, il ressort que ce sont les générations qui atteignent l’âge adulte entre 2020 et 2035 qui supportent la charge la plus forte. Les résultats sont établis sur base de données valables pour la Belgique. Puis nous comparons les enseignements de cette approche avec les résultats livrés par un modèle d’équilibre général dans lequel les agents ont une durée de vie incertaine. Ce type de modèle restitue un ensemble de grandeurs établies sur base d’hypothèses de comportement rationnel des individus et d’équilibre des marchés. Il nous montre que les écarts entre les charges supportées par les individus actuellement en vie et ceux à naître pourraient être beaucoup plus prononcés que ceux dégagés par une simple extrapolation mécanique. Cet effet est essentiellement dû à un rétrécissement des bases fiscales résultant d’une hausse du taux de taxation des salaires.In most developed countries, the age distribution of the population is shifting rapidly towards the elderly. If transfers and the tax schedule are unchanged, future generations will then have to bear an increased charge and, consequently, they could be deprived. This process is the subject of much debate, using tools like the Auerbach et al. (1991, 1993) and Kotlikoff's (1992) generational accounting. These aim to compare the mean charge to be borne by future generations with the net payments of the people presently alive. In this paper, we first propose an immediate extension of the Auerbach and Kotlikoff's standard generational accounting. We mechanically evaluate the distribution of the inherited charge between the future generations. If we suppose that the income tax is adapted on a yearly basis to meet the instantaneous public budget constraints, for a given debt ratio, people born at the beginning of the next century will be the most charged. These results are presented for the Belgian case. We then extend the Auerbach and Kotlikoff's standard generational accounting by developing a computable general equilibrium model with overlapping generations in which lifetime is uncertain. The general equilibrium approach yields results that are compatible with the hypothesis of an individual's rational behaviour and with the balancing of the markets. It is shown that the gap occurring between the charges borne by the present generations and the individuals to be born could be much higher than the one estimated through a simple mechanical methodology. This results from a shrinkage of the fiscal basis due to a higher tax on wages

Comptabilité générationnelle et vieillissement démographique : les enseignements d’un modèle d’équilibre général calculable calibré pour la Belgique

In most developed countries, the age distribution of the population is shifting rapidly towards the elderly. If transfers and the tax schedule are unchanged, future generations will then have to bear an increased charge and, consequently, they could be deprived. Dans la plupart des pays développés, un vieillissement démographique important s’annonce. À politique économique inchangée, ce vieillissement générera un accroissement important des charges supportées par les individus jeunes et actifs, présents et à venir, et donc une détérioration de la situation des générations futures. Dans ce débat, la comptabilité générationnelle d’Auerbach et al. (1991, 1994) et Kotlikoff (1992) occupe une place prépondérante. Elle permet, en effet, de comparer le bilan fiscal moyen des générations à venir avec la charge supportée par les générations actuelles.

African Banking Groups: Recent Trends and Strategic Issues

In this chapter we examine the recent trends in the banking sector in sub-Saharan Africa based on information from banks’ financial statements and from a unique survey of selected large banking groups operating in the region

Sub-Saharan African Banking Sectors: Results from a Survey of Banking Groups

This chapter takes stock of trends and strategic issues affecting banking groups in sub-Saharan Africa (SSA). Besides publicly available data, including from the IMF and the World Bank, this chapters relies on the results of the third edition of the EIB’s survey of banking groups in SSA