THE EFFECTS of volatility, natural resources and institutions on economic growth

Ness, Corinne Emily. (2010). THE EFFECTS of volatility, natural resources and institutions on economic growth Honours Thesis, School of Economics, The University of Queensland.

       
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Author Ness, Corinne Emily.
Thesis Title THE EFFECTS of volatility, natural resources and institutions on economic growth
School, Centre or Institute School of Economics
Institution The University of Queensland
Publication date 2010
Thesis type Honours Thesis
Supervisor Dr Fabrizio Carmignani
Total pages 117
Language eng
Subjects 9101 Macroeconomics
340000 Economics
910103 Economic Growth
Formatted abstract

This thesis explores the relationship between resource exports, macroeconomic volatility, institutional quality and economic growth for 188 countries and for a subset of 114 countries that are dependent on resource exports. Using two-stage least squares, the Arellano and Bond GMM methodology and simultaneous equations estimated using Generalized Method of Moments (GMM), it is found that there is an interconnected and strong relationship between resource exports, macroeconomic volatility, institutional quality and economic growth. The growth regressions show that volatility has a negative impact on growth for all countries and for those who are dependent on resources. Resource exports affect growth by two different processes, they directly increase growth but they also increase the level of volatility in an economy. Institutions are also found to have two different effects on growth because they decrease growth but they also decrease the level of volatility. The results of these regressions show that good institutions can mitigate the effects of resources by mitigating the effects that resources have on volatility. In the case of those countries which are highly dependent on resources, the quality of their institutions is more important for economic growth than increasing resource exports. The regressions run in this thesis were subjected to sensitivity analysis and, on the whole, the results were robust. 

Keyword Macroeconomics
Economic development
Natural resources

 
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