Skip to main content

Endowment Changes in Economic Equilibrium: The Dutch Disease Revisited

  • Chapter

Abstract

This paper is concerned with an economic phenomenon known as ‘Dutch Disease’: an economy’s manufacturing sector declines as a result of a resource boom. We look into related supply-side aspects which appear to be significant if seen from the viewpoint of microeconomic general equilibrium theory. Several comparative-statics results will be presented for the case of a small open economy. We also briefly discuss welfare implications in terms of changes in income distribution and GNP.

Keywords

  • Factor Price
  • Full Employment
  • Small Open Economy
  • Output Price
  • Resource Input

These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

This is a preview of subscription content, access via your institution.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  • Bruno, M., and Sachs, J. (1982), “Energy and Resource Allocation: A Dynamic Model of the “Dutch Disease”,” Review of Economic Studies 49, 845–859.

    CrossRef  Google Scholar 

  • Cassing, J.H., and Warr, P.G. (1982), The Distributional Impact of a Resource Boom, Working Paper 65, Australian National University, Canberra.

    Google Scholar 

  • Corden, W.M. (1984), “Booming Sector and Dutch Disease Economics: A Survey,” Oxford Economic Papers 36, 359–380.

    Google Scholar 

  • Corden, W.M., and Neary, J.P. (1982), “Booming Sector and De-Industrialisation in a Small Open Economy,” Economic Journal 92, 825–848.

    CrossRef  Google Scholar 

  • Diewert, W.E. (1982), “Duality Approaches to Microeconomic Theory,” in: K.J. Arrow and M.D. Intriligator (eds.), Handbook of Mathematical Economics II, North- Holland, Amsterdam, 535–799.

    Google Scholar 

  • Dixit, A.K., and Norman, V. (1980), Theory of International Trade, Cambridge University Press.

    CrossRef  Google Scholar 

  • Eichhorn, W. (1970), Theorie der homogenen Produktionsfunktion, Springer, Berlin-Heidelberg-New York.

    Google Scholar 

  • Eichhorn, W., Henn, R., Opitz, O., and Shephard, R.W. (eds.) (1974), Production Theory, Springer, Berlin-Heidelberg-New York.

    Google Scholar 

  • Eichhorn, W. (1986), “Das Eulersche Theorem,” Wirtschaftswissenschaftliches Studium 15, 29–32.

    Google Scholar 

  • Eichhorn, W., Shephard, R.W., and Stehling, F. (1979), “Produktions- und Kostentheorie,” in: M.J. Beckmann, G. Menges, and R. Selten (eds.) Handwörterbuch der Mathematischen Wirtschaftswissenschaften I, Wirtschaftstheorie, Gabler, Wiesbaden, 333–358.

    Google Scholar 

  • Enders, K. (1984), “The Dutch Disease or Problems of Sectoral Boom,” Zeitschrift für Wirtschafts- und Sozialwissenschaften 104, 1–20. Reprinted 1990 in F. Gehrels, H. Herberg, H. Schneider, and H.-J. Vosgerau (eds.), Real Adjustment Processes under Floating Exchange Rates, Springer, Berlin-Heidelberg-New York, 33–52.

    Google Scholar 

  • Gamble, A. (1981), Britain in Decline, Macmillan, London.

    Google Scholar 

  • Hahn, F. (1982), “Stability,” in: K.J. Arrow and M.D. Intriligator (eds.), Handbook of Mathematical Economics II, North-Holland, Amsterdam, 745–793.

    Google Scholar 

  • Herberg, H., and Enders K. (1984), “More on the Consequences of a Resource Boom and the Cures of the Dutch Disease,” in: H. Slebert (ed.), The Resource Sector in an Open Economy, Springer, Berlin-Heidelberg-New York, 47–94.

    Google Scholar 

  • Neary, J.P. (1982), Real and Monetary Aspects of the “Dutch Disease”, mimeo.

    Google Scholar 

  • Neary, J.P., and Purvis, D.D. (1982), “Sectoral Shocks in a Dependent Economy: Long-run Adjustment and Short-run Accomodation,” Scandinavian Journal of Economics 84, 229–253.

    CrossRef  Google Scholar 

  • Shea, K.-L. (1981), “A Graphical Analysis of Factor Accumulation in a Three-Sector, Three-Factor Model of International Trade,” Economic Journal 91, 1020–1025.

    CrossRef  Google Scholar 

  • Takayama, A. (1974), Mathematical Economics, Dryden, Hinsdale.

    Google Scholar 

  • Woodland, A.D. (1982), International Trade and Resource Allocation, North-Holland, Amsterdam.

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Editor information

Editors and Affiliations

Rights and permissions

Reprints and Permissions

Copyright information

© 1993 Springer-Verlag Berlin · Heidelberg

About this chapter

Cite this chapter

Pfingsten, A., Wolff, R. (1993). Endowment Changes in Economic Equilibrium: The Dutch Disease Revisited. In: Diewert, W.E., Spremann, K., Stehling, F. (eds) Mathematical Modelling in Economics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-78508-5_27

Download citation

  • DOI: https://doi.org/10.1007/978-3-642-78508-5_27

  • Publisher Name: Springer, Berlin, Heidelberg

  • Print ISBN: 978-3-642-78510-8

  • Online ISBN: 978-3-642-78508-5

  • eBook Packages: Springer Book Archive