Resources, innovation and growth in the global economy

Pietro F. Peretto, Simone Valente

Research output: Contribution to journalArticlepeer-review

18 Citations (Scopus)

Abstract

The relative performance of open economies is analyzed in an endogenous growth model with asymmetric trade. A resource-rich country trades resource-based intermediates for final goods produced by a resource-poor economy. The effects of an increase in the resource endowment depend on the elasticity of substitution between resources and labor in intermediates' production. Under substitution (complementarity), the resource boom generates higher (lower) income, lower (higher) employment in the primary sector and faster (slower) growth in the resource-rich economy. In the resource-poor economy, the shock induces a higher (lower) relative wage and positive (negative) growth effects that are exclusively due to trade.
Original languageEnglish
Pages (from-to)387-399
Number of pages13
JournalJournal of Monetary Economics
Volume58
Issue number4
DOIs
Publication statusPublished - May 2011

Cite this