Genuine Savings and the Voracity Effect

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Show simple item record VAN DER PLOEG, Frederick 2007-10-27T08:13:12Z 2007-10-27T08:13:12Z 2007
dc.identifier.issn 1725-6704
dc.description.abstract Many resource-rich countries have negative genuine saving rates, so deplete their exhaustible natural resource wealth faster than they build up wealth in other assets. This phenomenon is stronger in more fractionalized countries with poor legal systems. We explain this by a power struggle about the control of natural resources. Competing fractions in society thus have a private stock of financial assets and a common stock of natural resources. We solve a dynamic commonpool problem and obtain political economy variants of the Hotelling rule for resource depletion and the Hartwick saving rule necessary to sustain constant consumption in an economy with exhaustible natural resources. Resource depletion is faster than demanded by the Hotelling rule. As a result, the country has negative genuine saving rates and is running down its national wealth. The country saves more in financial assets than the current natural resource rents. Still, the erosion of natural wealth exceeds the accumulation of financial assets. Even though the power struggle boosts output, consumption is sub-optimally low. The highlighted political distortions are larger if the country is more fractionalized. en
dc.format.mimetype application/pdf
dc.language.iso en en
dc.publisher European University Institute
dc.relation.ispartofseries EUI ECO en
dc.relation.ispartofseries 2007/38 en
dc.rights info:eu-repo/semantics/openAccess
dc.subject E20 en
dc.subject F32 en
dc.subject O13 en
dc.subject Q01 en
dc.subject Q32 en
dc.subject Exhaustible natural resources en
dc.subject Hotelling resource rents en
dc.subject Hartwick rule en
dc.subject genuine saving, capital en
dc.subject sustainable consumption en
dc.subject rapacious rent seeking en
dc.subject common pool en
dc.subject voracity en
dc.subject fractionalization en
dc.title Genuine Savings and the Voracity Effect en
dc.type Working Paper en
dc.neeo.contributor VAN DER PLOEG|Frederick|aut|
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