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The capital gains from trade are not enough: Evidence from the environmental accounts of Venezuela and Mexico
Rubio, M. del Mar
Universitat Pompeu Fabra. Departament d'Economia i Empresa
In principle, a country can not endure negative genuine savings for longperiods of time without experiencing declining consumption. Nevertheless,theoreticians envisage two alternatives to explain how an exporter ofnon-renewable natural resources could experience permanent negativegenuine savings and still ensure sustainability. The first one allegesthat the capital gains arising from the expected improvement in theterms of trade would suffice to compensate for the negative savings ofthe resource exporter. The second alternative points at technologicalchange as a way to avoid economic collapse. This paper uses the dataof Venezuela and Mexico to empirically test the first of these twohypotheses. The results presented here prove that the terms oftrade do not suffice to compensate the depletion of oil reservesin these two open economies.
2005-09-15
Macroeconomics and International Economics
exhaustive resources
environmental accounts
net national product
genuine savings
foreign trade
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Working Paper
         

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