Resource Discoveries, Learning, and National Income Accounting
Questions about the ultimate size of mineral and energy resource endowments and the degree of fiscal prudence which should be exercised by countries engaged in resource extraction have become central for many developing countries during the recent...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2013/06/17919466/resource-discoveries-learning-national-income-accounting http://hdl.handle.net/10986/15864 |
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okr-10986-158642021-04-23T14:03:23Z Resource Discoveries, Learning, and National Income Accounting Hamilton, Kirk Atkinson, Giles ALLOCATION ASSET VALUE BALANCE SHEET BASE YEAR CAPITAL GAIN CAPITAL GAINS CLIMATE CLIMATE CHANGE CLOSED ECONOMY CONSTANT RETURNS TO SCALE CONSUMPTION INCREASES CURRENT PRICES DEPOSIT DEPOSITS DERIVATIVE DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISCOUNT RATE DISCOUNT RATES DISCOUNTED VALUE DISTRIBUTION OF INCOME ECONOMIC CONDITIONS ECONOMIC FACTORS ECONOMIC RESEARCH ECONOMIC THEORY ECONOMICS ENERGY ECONOMICS ENERGY POLICY ENVIRONMENTAL ENVIRONMENTAL ACCOUNTING ENVIRONMENTAL ACCOUNTS ENVIRONMENTAL ECONOMICS EXPECTED VALUE EXPENDITURES EXPLOITATION EXPORTER EXPORTERS EXPORTS FACE VALUE FEASIBILITY FINANCIAL ASSETS FISCAL POLICIES FISCAL POLICY FORECASTS FUNCTIONAL FORMS GDP GROWTH RATE IMPERFECT ECONOMIES IMPORTS INCOME GROWTH INCOME MEASURES INTEREST RATE INTERGENERATIONAL EQUITY INTERNATIONAL BANK INVESTING LAND PRICES MARGINAL PRODUCT MARGINAL UTILITY MARGINAL UTILITY OF CONSUMPTION MONOPOLY NATIONAL ACCOUNTING NATIONAL INCOME NATIONAL INCOME ACCOUNTING NATIONAL SAVING NATURAL RESOURCES OIL OIL PRICE OIL PRICES OIL PRODUCTION OIL RESERVE OIL RESOURCE OIL RESOURCES OLIGOPOLY OPEN ECONOMIES OPTIMIZATION POLITICAL ECONOMY PRESENT VALUE PRICE VOLATILITY PROBABILITY DISTRIBUTION PRODUCTION FUNCTION PROVEN OIL RESERVES PROVEN RESERVES RENT SEEKING RESERVE RESOURCE ECONOMICS RETURN RETURNS SAVINGS SAVINGS RATES SHADOW PRICES STOCKS SUBSTITUTION SUSTAINABLE DEVELOPMENT TECHNOLOGICAL CHANGE TECHNOLOGICAL PROGRESS UNCERTAINTIES UTILITY FUNCTION WEALTH resource discoveries Questions about the ultimate size of mineral and energy resource endowments and the degree of fiscal prudence which should be exercised by countries engaged in resource extraction have become central for many developing countries during the recent resource boom. To explore these questions, this paper develops a model of optimal resource extraction and discovery that combines two polar assumptions: (i) that discovering a resource today drives up the cost of future resource discoveries, and (ii) that extracting resources yields knowledge that reduces the cost of discovery. Although the model shows that resource discoveries should be valued at marginal discovery cost in measures of national saving and income, the ultimate size of the resource that can be exploited is the result of the interplay between rising discovery costs and accumulating knowledge. Empirical tests of the model show that the resulting income estimates would be extremely volatile for many extractive economies, owing to the lumpiness of resource discoveries. Two alternative accounting approaches, based on Hicksian concepts, yield more intuitive and less volatile income estimates. The question of fiscal prudence for extractive economies hinges on how optimistic countries are about the risks in future mineral and energy markets, and how far into the future these countries are willing to project optimistic trends when making decisions about how much to consume and how much to save of current resource revenues. 2013-09-26T16:21:54Z 2013-09-26T16:21:54Z 2013-06 http://documents.worldbank.org/curated/en/2013/06/17919466/resource-discoveries-learning-national-income-accounting http://hdl.handle.net/10986/15864 English en_US Policy Research Working Paper;No. 6505 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ALLOCATION ASSET VALUE BALANCE SHEET BASE YEAR CAPITAL GAIN CAPITAL GAINS CLIMATE CLIMATE CHANGE CLOSED ECONOMY CONSTANT RETURNS TO SCALE CONSUMPTION INCREASES CURRENT PRICES DEPOSIT DEPOSITS DERIVATIVE DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISCOUNT RATE DISCOUNT RATES DISCOUNTED VALUE DISTRIBUTION OF INCOME ECONOMIC CONDITIONS ECONOMIC FACTORS ECONOMIC RESEARCH ECONOMIC THEORY ECONOMICS ENERGY ECONOMICS ENERGY POLICY ENVIRONMENTAL ENVIRONMENTAL ACCOUNTING ENVIRONMENTAL ACCOUNTS ENVIRONMENTAL ECONOMICS EXPECTED VALUE EXPENDITURES EXPLOITATION EXPORTER EXPORTERS EXPORTS FACE VALUE FEASIBILITY FINANCIAL ASSETS FISCAL POLICIES FISCAL POLICY FORECASTS FUNCTIONAL FORMS GDP GROWTH RATE IMPERFECT ECONOMIES IMPORTS INCOME GROWTH INCOME MEASURES INTEREST RATE INTERGENERATIONAL EQUITY INTERNATIONAL BANK INVESTING LAND PRICES MARGINAL PRODUCT MARGINAL UTILITY MARGINAL UTILITY OF CONSUMPTION MONOPOLY NATIONAL ACCOUNTING NATIONAL INCOME NATIONAL INCOME ACCOUNTING NATIONAL SAVING NATURAL RESOURCES OIL OIL PRICE OIL PRICES OIL PRODUCTION OIL RESERVE OIL RESOURCE OIL RESOURCES OLIGOPOLY OPEN ECONOMIES OPTIMIZATION POLITICAL ECONOMY PRESENT VALUE PRICE VOLATILITY PROBABILITY DISTRIBUTION PRODUCTION FUNCTION PROVEN OIL RESERVES PROVEN RESERVES RENT SEEKING RESERVE RESOURCE ECONOMICS RETURN RETURNS SAVINGS SAVINGS RATES SHADOW PRICES STOCKS SUBSTITUTION SUSTAINABLE DEVELOPMENT TECHNOLOGICAL CHANGE TECHNOLOGICAL PROGRESS UNCERTAINTIES UTILITY FUNCTION WEALTH resource discoveries |
| spellingShingle |
ALLOCATION ASSET VALUE BALANCE SHEET BASE YEAR CAPITAL GAIN CAPITAL GAINS CLIMATE CLIMATE CHANGE CLOSED ECONOMY CONSTANT RETURNS TO SCALE CONSUMPTION INCREASES CURRENT PRICES DEPOSIT DEPOSITS DERIVATIVE DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISCOUNT RATE DISCOUNT RATES DISCOUNTED VALUE DISTRIBUTION OF INCOME ECONOMIC CONDITIONS ECONOMIC FACTORS ECONOMIC RESEARCH ECONOMIC THEORY ECONOMICS ENERGY ECONOMICS ENERGY POLICY ENVIRONMENTAL ENVIRONMENTAL ACCOUNTING ENVIRONMENTAL ACCOUNTS ENVIRONMENTAL ECONOMICS EXPECTED VALUE EXPENDITURES EXPLOITATION EXPORTER EXPORTERS EXPORTS FACE VALUE FEASIBILITY FINANCIAL ASSETS FISCAL POLICIES FISCAL POLICY FORECASTS FUNCTIONAL FORMS GDP GROWTH RATE IMPERFECT ECONOMIES IMPORTS INCOME GROWTH INCOME MEASURES INTEREST RATE INTERGENERATIONAL EQUITY INTERNATIONAL BANK INVESTING LAND PRICES MARGINAL PRODUCT MARGINAL UTILITY MARGINAL UTILITY OF CONSUMPTION MONOPOLY NATIONAL ACCOUNTING NATIONAL INCOME NATIONAL INCOME ACCOUNTING NATIONAL SAVING NATURAL RESOURCES OIL OIL PRICE OIL PRICES OIL PRODUCTION OIL RESERVE OIL RESOURCE OIL RESOURCES OLIGOPOLY OPEN ECONOMIES OPTIMIZATION POLITICAL ECONOMY PRESENT VALUE PRICE VOLATILITY PROBABILITY DISTRIBUTION PRODUCTION FUNCTION PROVEN OIL RESERVES PROVEN RESERVES RENT SEEKING RESERVE RESOURCE ECONOMICS RETURN RETURNS SAVINGS SAVINGS RATES SHADOW PRICES STOCKS SUBSTITUTION SUSTAINABLE DEVELOPMENT TECHNOLOGICAL CHANGE TECHNOLOGICAL PROGRESS UNCERTAINTIES UTILITY FUNCTION WEALTH resource discoveries Hamilton, Kirk Atkinson, Giles Resource Discoveries, Learning, and National Income Accounting |
| relation |
Policy Research Working Paper;No. 6505 |
| description |
Questions about the ultimate size of
mineral and energy resource endowments and the degree of
fiscal prudence which should be exercised by countries
engaged in resource extraction have become central for many
developing countries during the recent resource boom. To
explore these questions, this paper develops a model of
optimal resource extraction and discovery that combines two
polar assumptions: (i) that discovering a resource today
drives up the cost of future resource discoveries, and (ii)
that extracting resources yields knowledge that reduces the
cost of discovery. Although the model shows that resource
discoveries should be valued at marginal discovery cost in
measures of national saving and income, the ultimate size of
the resource that can be exploited is the result of the
interplay between rising discovery costs and accumulating
knowledge. Empirical tests of the model show that the
resulting income estimates would be extremely volatile for
many extractive economies, owing to the lumpiness of
resource discoveries. Two alternative accounting approaches,
based on Hicksian concepts, yield more intuitive and less
volatile income estimates. The question of fiscal prudence
for extractive economies hinges on how optimistic countries
are about the risks in future mineral and energy markets,
and how far into the future these countries are willing to
project optimistic trends when making decisions about how
much to consume and how much to save of current resource revenues. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Hamilton, Kirk Atkinson, Giles |
| author_facet |
Hamilton, Kirk Atkinson, Giles |
| author_sort |
Hamilton, Kirk |
| title |
Resource Discoveries, Learning, and National Income Accounting |
| title_short |
Resource Discoveries, Learning, and National Income Accounting |
| title_full |
Resource Discoveries, Learning, and National Income Accounting |
| title_fullStr |
Resource Discoveries, Learning, and National Income Accounting |
| title_full_unstemmed |
Resource Discoveries, Learning, and National Income Accounting |
| title_sort |
resource discoveries, learning, and national income accounting |
| publisher |
World Bank, Washington, DC |
| publishDate |
2013 |
| url |
http://documents.worldbank.org/curated/en/2013/06/17919466/resource-discoveries-learning-national-income-accounting http://hdl.handle.net/10986/15864 |
| _version_ |
1764431664740564992 |