Foreign exchange windfalls such as those from natural resource revenues change non-resource exports, imports, and the capital account. We study the balance between these responses and, using data on 41 resource exporters for 1970-2006, show that the response to a dollar of resource revenue is,...

We provide evidence that institutions strongly influence where investors drill for oil and gas. At national borders, investors drill on the side with better institutionalquality two times out of three. To identify the effect of institutions, we utilise a global data set on the location of...

We propose a framework for estimating forward-looking fiscal reaction functions for non-hydrocarbon tax and public spending shares and the deficit using official projections for hydrocarbon revenues and the burden of pensioners used by government agencies. We apply this framework to Norway and...

This article examines the possible adverse effects of well-intended climate policies. A weak Green Paradox arises if the announcement of a future carbon tax or a sufficiently fast rising carbon tax encourages fossil fuel owners to extract reserves more aggressively, thus exacerbating global...

The optimal reaction to a productivity shock which becomes more imminent with global warming is to price carbon (proportional to the marginal hazard of a catastrophe) to curb the risk of climate change, but also to accumulate precautionary capital to facilitate smoothing of consumption and curb...

A rapidly rising carbon tax leads to faster extraction of fossil fuels and accelerates global warming. We analyze how general equilibrium effects operating through the international capital market affect this Green Paradox. In a two-region, two-period world with identical homothetic preferences...

A classroom model of global warming, fossil fuel depletion and the optimal carbon tax is formulated and calibrated. It features iso-elastic fossil fuel demand, stock-dependent fossil fuel extraction costs, an exogenous interest rate and no decay of the atmospheric stock of carbon. The optimal...

The principles of how best to manage the various components of national wealth are outlined, where the permanent income hypothesis, the Hotelling rule and the Hartwick rule play a prominent role. As far as managing natural resource wealth is concerned, a case is made to use an intergenerational...

Optimal climate policy should act in a precautionary fashion to deal with tipping points that occur at some future random moment. The optimal carbon tax should include an additional component on top of the conventional present discounted value of marginal global warming damages. This component...

Climate change must deal with two market failures, global warming and learning by doing in renewable use. The social optimum requires an aggressive renewables subsidy in the near term and a gradually rising carbon tax which falls in long run. As a result, more renewables are used relative to...