Endogenous Growth, Asymmetric Trade and Resource Taxation

Lucas Bretschger and Simone Valente

No 10/132, CER-ETH Economics working paper series from CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich

Abstract: Since 1980, the aggregate income of oil-exporting countries relative to that of oil- poor countries has been remarkably constant despite structural gaps in productivity growth rates. This stylized fact is analyzed in a two-country model where resource- poor (Home) and resource-rich (Foreign) economies display productivity differences but stable income shares due to terms-of-trade dynamics. We show that Home's income share is positively related to the national tax on domestic resource use, a prediction confirmed by dynamic panel estimations for sixteen oil-poor economies. National governments have incentives to deviate from both efficient and laissez-faire allocations. In Home, increasing the oil tax improves welfare through a rent-transfer mechanism. In Foreign, subsidies (taxes) on domestic oil use improve welfare if R&D productivity is lower (higher) than in Home.

Keywords: Endogenous Growth; Exhaustible Resources; International Trade (search for similar items in EconPapers)
JEL-codes: F43 O40 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2010-08
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://www.ethz.ch/content/dam/ethz/special-inter ... papers/WP-10-132.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not found UA (https://www.ethz.ch/content/dam/ethz/special-interest/mtec/cer-eth/cer-eth-dam/documents/working-papers/WP-10-132.pdf [301 Moved Permanently]--> https://ethz.ch/content/dam/ethz/special-interest/mtec/cer-eth/cer-eth-dam/documents/working-papers/WP-10-132.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eth:wpswif:10-132

Access Statistics for this paper

More papers in CER-ETH Economics working paper series from CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich Contact information at EDIRC.
Bibliographic data for series maintained by ().