Effects of Different Approaches to Use of Non-Renewable (Oil) Resource’s Revenues on Iran’s Economic Growth

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Abstract:

In this paper, we use the insights of the Real Business Cycles School, to calculate effects of different approaches to allocation of non-renewable (oil) resources’ revenues on Iran’s economic growth. We compare three different approaches, namely allocating the total revenue to the government, allocating some part of the revenue to the government and the rest to investing and allocating the revenue based on Hartwick lemma by using a General Equilibrium Model. The results show that to obtain the best results in terms of  economic growth, we should allocate the revenues based on Hartwick lemma. In another word, technical growth can cause suitable economic growth only if accumulation of capital can replace the non-renewable (energy) resource’s revenue. JEL Classification: E17, Q3 Keywords: Allocations of Revenue, Non-Renewable Resource, Economic Growth, General Equilibrium Model.

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Journal title

volume 16  issue 64

pages  65- 95

publication date 2020-05

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