Current Account Norms in Natural Resource Rich and Capital Scarce Economies is popular PDF and ePub book, written by Juliana Dutra Araujo in 2013-03-27, it is a fantastic choice for those who relish reading online the Business & Economics genre. Let's immerse ourselves in this engaging Business & Economics book by exploring the summary and details provided below. Remember, Current Account Norms in Natural Resource Rich and Capital Scarce Economies can be Read Online from any device for your convenience.
Current Account Norms in Natural Resource Rich and Capital Scarce Economies Book PDF Summary
The permanent income hypothesis implies that frictionless open economies with exhaustible natural resources should save abroad most of their resource windfalls and, therefore, feature current account surpluses. Resource-rich developing countries (RRDCs), on the other hand, face substantial development needs and tight external borrowing constraints. By relaxing these constraints and providing a key financing source for public investment in RRDCs, temporary resource revenues might then be associated with current account deficits, or at least low surpluses. This paper develops a neoclassical model with private and public investment and several frictions that capture pervasive features in RRDCs, including absorptive capacity constraints, inefficiencies in investment, and borrowing constraints that can be relaxed when natural resources lower the country risk premium. The model is used to study the role of investment and these frictions in shaping the current account dynamics under windfalls. Since consumption and investment decisions are optimal, the model also serves to provide current account benchmarks (norms). We apply the model to the Economic and Monetary Community of Central Africa and discuss how our results can be used to inform the current account norm analysis pursued at the International Monetary Fund.
Detail Book of Current Account Norms in Natural Resource Rich and Capital Scarce Economies PDF
- Author : Juliana Dutra Araujo
- Release : 27 March 2013
- Publisher : International Monetary Fund
- ISBN : 9781484396032
- Genre : Business & Economics
- Total Page : 34 pages
- Language : English
- PDF File Size : 15,7 Mb
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