St.Petersburg Economic seminar (HSE, EU, PDMI) on December, 12: Rick Van der Ploeg (University of Oxford)

Topic: Harnessing and Managing Natural Resource Windfalls
Date & Time: December, 12; 18:00 - 19:30
Venue: St Petersburg, Fontanka river embankment, 27, PDMI RAS, Marble hall (2nd floor)

We invite you to participate in the St.Petersburg Economic seminar (HSE, EU, PDMI) on December, 12.

Rick Van der Ploeg (Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford) will give a talk on Harnessing and Managing Natural Resource Windfalls.

Time: 18:00 - 19:30
Venue: St Petersburg, Fontanka river embankment, 27, PDMI RAS, Marble hall (2nd floor)

Abstract: Many countries that discover oil or gas experience a worsening of competitiveness, a decline in the traded sector and reduced growth prospects even before the oil or gas is being pumped out of the ground. The optimal response is to borrow and have a current account deficit ahead of the windfall, to save during the windfall, and to hand out a citizen dividend after the windfall. Any accumulated funds should be invested abroad, not in the domestic economy. However, if the country experiences capital scarcity and financial frictions, part of the oil and gas revenue should be invested in the domestic economy and speed up growth and development. Furthermore, the remaining parts of the oil and revenue should be used to boost consumption but also to first finance a pro-business policy to stimulate capital accumulation, and further down the development path switch to a pro-labour policy. This is illustrated with a macro growth model with financial frictions, workers and a class of capitalists with different degrees of productivity and wealth. We conclude with various political economy reasons for why such first-best policies to harness oil and gas revenue often fail, paying attention to politically motivated tariffs, partisan biases associated with the political risk of being removed from office and the risk of stranded assets due to stepping up of climate policy or renewable energy breakthroughs. Some of the latter can be analysed as catastrophic threats of regime shifts.


Calendar: https://tinyurl.com/spbecon
Research seminar webpage: https://spb.hse.ru/en/scem/ilgt/hse-eusp-seminar