TY  - JOUR
AU  - Alberola, Enrique
AU  - Benigno, Gianluca
TI  - Revisiting the Commodity Curse: A Financial Perspective
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 23169
PY  - 2017
Y2  - February 2017
DO  - 10.3386/w23169
UR  - http://www.nber.org/papers/w23169
L1  - http://www.nber.org/papers/w23169.pdf
N1  - Author contact info:
Enrique Alberola
Bank for International Settlements (BIS)
Basel, Switzerland
E-Mail: enrique.alberola@bis.org

Gianluca Benigno
Department of Economics
London School of Economics
WC2A 2AE
London WC2A 2AE 
United Kingdom
E-Mail: g.benigno@lse.ac.uk
M1  - published as Enrique Alberola, Gianluca Benigno. "Revisiting the Commodity Curse: A Financial Perspective," in Richard Clarida, Lucrezia Reichlin, and Michael Devereux, organizers, "NBER International Seminar on Macroeconomics 2016" Journal of International Economics, Volume 108, Supp. 1 (Elsevier) (2017)

M3  - presented at "International Seminar on Macroeconomics - Hosted by Sofia University", June 24-25, 2016
AB  - We study the response of a three-sector commodity-exporter small open economy to a commodity price boom. When the economy has access to international borrowing and lending, a temporary commodity price boom brings about the standard wealth effect that stimulates demand and has long-run implications on the sectoral allocation of labour. If dynamic productivity gains are concentrated in the traded goods sector, the commodity boom crowds out the traded sector and delays convergence to the world technology frontier. Financial openness by stimulating current demand, amplifies the crowding out effect and may even lead to a growth trap, in which no resources are allocated to the traded sector. From a normative point of view, our analysis suggests that capital account management policies could be welfare improving in those circumstances.
ER  -