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Assessing the Effects of Natural Resources on Long-Term Growth: An Extension of the World Bank Long Term Growth Model

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dc.contributor.authorLoayza, Norman V.
dc.contributor.authorGalego Mendes, Arthur
dc.contributor.authorMendez Ramos, Fabian
dc.contributor.authorPennings, Steven Michael
dc.date.accessioned2022-03-17T18:50:48Z
dc.date.available2022-03-17T18:50:48Z
dc.date.issued2022-03-14
dc.description.abstractThis paper extends the World Bank's Long-Term Growth Model (LTGM) with the addition of a natural resource sector to analyze how long-run growth evolves in resource-rich countries and the growth impacts of price shocks and resource discoveries. In the LTGM-Natural Resource Extension (LTGM-NR), commodity price shocks affect long-term economic growth through physical investment rates. As a large share of resource income typically accrues to the government, the size of the boost to investment in a price boom depends on the government’s fiscal rule. Fiscal rules that prioritize public investment, like a Hartwick Rule, generally lead to the largest increases in long-term growth. However, structural surplus rules, which save commodity revenues, can also boost growth if they free up savings for private investment. The response of growth to discoveries of natural resources is similar to the response to price shocks, although discoveries also produce a direct effect on real GDP, in addition to an indirect effect through investment. The LTGM¬-NR also captures the effect of other (non-resource) growth fundamentals in resource-rich economies, and it is better suited to general growth analysis in these countries than the standard LTGM. However, the LTGM-NR is a supply-side model, and so does not capture the short-run effects of price and discovery shocks that operate through aggregate demand.en
dc.identifierhttp://documents.worldbank.org/curated/en/584811647268984881/Assessing-the-Effects-of-Natural-Resources-on-Long-Term-Growth-An-Extension-of-the-World-Bank-Long-Term-Growth-Model
dc.identifier.doi10.1596/1813-9450-9965
dc.identifier.urihttps://hdl.handle.net/10986/37162
dc.languageEnglish
dc.publisherWashington, DC: World Bank
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo
dc.subjectCOMMODITY PRICE FLUCTUATION
dc.subjectOIL SECTOR
dc.subjectDEVELOPMENT RESEARCH GROUP
dc.subjectFORCE PARTICIPATION RATE
dc.subjectCOMPOSITION OF GOVERNMENT EXPENDITURE
dc.subjectOIL RESERVE
dc.titleAssessing the Effects of Natural Resources on Long-Term Growthen
dc.title.subtitleAn Extension of the World Bank Long Term Growth Modelen
dc.typeWorking Paperen
dc.typeDocument de travailfr
dc.typeDocumento de trabajoes
dspace.entity.typePublication
okr.date.disclosure2022-03-14
okr.date.lastmodified2022-03-14T00:00:00Zen
okr.doctypePolicy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/584811647268984881/Assessing-the-Effects-of-Natural-Resources-on-Long-Term-Growth-An-Extension-of-the-World-Bank-Long-Term-Growth-Model
okr.guid584811647268984881
okr.identifier.doi10.1596/1813-9450-9965
okr.identifier.externaldocumentum090224b088d295df_1_0
okr.identifier.internaldocumentum33757729
okr.identifier.reportWPS9965
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/584811647268984881/pdf/Assessing-the-Effects-of-Natural-Resources-on-Long-Term-Growth-An-Extension-of-the-World-Bank-Long-Term-Growth-Model.pdfen
okr.topicPublic Finance Decentralization and Poverty Reduction
okr.topicPublic Sector Economics
okr.topicEconomic Adjustment and Lending
okr.topicMacro-Fiscal Policy
okr.topicMacroeconomics and Economic Growth
okr.topicEconomic Policy
okr.topicInstitutions and Governance
okr.topicFiscal and Monetary Policy
okr.topicEnergy Demand
okr.topicEnergy and Mining
okr.topicEnergy and Environment
okr.topicCoastal and Marine Resources
okr.topicEnergy and Natural Resources
okr.topicPublic Sector Development
okr.topicMacroeconomics and Economic Growth
okr.topicEnergy
okr.topicWater Resources
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relation.isAuthorOfPublication.latestForDiscovery83daf4e9-5061-5f1f-b16b-68116394433c
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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