publication . Preprint . Research . Article . 2007

Commodity Prices, Growth, and the Natural Resource Curse: Reconciling a Conundrum

Paul Collier; Benedikt Goderis;
Open Access
  • Published: 01 Jan 2007
  • Country: United Kingdom
Currently, evidence on the ‘resource curse’ yields a conundrum. While there is much cross section evidence to support the curse hypothesis, time series analyses using vector autoregressive (VAR) models have found that commodity booms raise the growth of commodity exporters. This paper adopts panel cointegration methodology to explore longer term effects than permitted using VARs. We find strong evidence of a resource curse. Commodity booms have positive short-term effects on output, but adverse long-term effects. The long-term effects are confined to “high-rent”, non-agricultural commodities. We also find that the resource curse is avoided by countries with suff...
free text keywords: commodity prices; natural resource curse; growth, Commodity Prices, Natural Resource Curse, Growth, jel:O13, jel:O47, jel:Q33
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