Macroeconomic Model of a Developing Country Endowed with a Natural Resource, A

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This publication presents a short-run theoretical macroeconomic model of a small open economy endowed with a natural resource exporting sector. The paper attempts to differentiate between the economic development experience of East Asia and Latin America. The economy in the model here explained is comprised of three sectors: a resource based commodity, a non-traded good and a traded sector. The model in the paper explicitly analyzes short-run effects of resource booms, devaluation, a rise in the money supply induced by capital inflows and taxation to discourage non - traded goods consumption. The publication comprises of a selective review of literature relevant to the construction of macroeconomic models involving resource booms, and presents variations in the model's parameters.


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UNU/WIDER Working Papers

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