Theodoros Chatzivasileiadis (p), Olga Ivanova, Kristian Bakker, Tatiana Filatova

Diana Cibulskiene

Modelling the direct and indirect economic effects of environmental policy at the regional level requires extensive information on the technological efficiency of all economic sectors and regions in a country. In achieving that, this study reviews and analyses the changes in total factor productivity (TFP) growth in both dimensions. Using regional and sectoral data for the Dutch 12 NUTS2 regions (provinces) we estimate the regional and sectoral TFP till 2020. The disaggregated TFP is estimated using a Solow-Tournqvist residuals as well as another alternative measurement. Using these as a benchmark, we forecast the sectoral and regional long-term TFP till 2060. The forecast is based on SSP1 and SSP3 scenarios, using the results of the CEPII MaGE model for national TFP and a set of assumptions for value added, education, barriers to trade and R&D relevant for the Dutch regions. The results indicate significant regional and sectoral variation in both scenarios. This variation is particularly significant in the future policy design. Climate related policy has a significant regional component also in spatially small countries like the Netherlands. This spatially related component needs to be explored in detail and modelled before climate policies are tested within macro-economic models.

Carlos Eduardo Espinel Campos (p), Marcelo Dias Paes Ferreira

Theodoros Chatzivasileiadis

The term 'Resource Curse' refers to the phenomenon where countries that possess abundant natural resources tend to experience slower economic growth than those with fewer resources. This has been consistently observed in various development studies. The article in question sought to examine whether the distribution of royalties in Brazil, by Law No. 12.858 of September 9, 2013, which allocated a portion of the participation in the result or financial compensation for the exploration of oil and natural gas to education and health, contributed to the development of beneficiary municipalities. To evaluate this, the article used the difference-in-differences (diff-in-diff) estimator to compare the GDP of municipalities that are affected by a particular policy change (in this case, the distribution of royalties) with those that are not affected, exploiting the policy change as an exogenous factor. The results of the analysis showed that the per capita GDP of the municipalities eligible for royalty revenues was, on average, approximately $300 lower than those not included in the royalty distribution from oil and natural gas exploration in Brazil. Therefore, the results supported the existence of the resource curse phenomenon, as the high dependency on resources (in this case, oil and gas royalties) had a negative impact on local economic growth, as measured by per capita municipal GDP. The article also conducted a sectoral analysis of the effects of the royalty distribution on the GDP of beneficiary municipalities. The results showed that the municipalities eligible for royalties had a higher proportion of agriculture in their GDP (around 3.5%) compared to those that were not eligible. Additionally, the service sector showed a positive effect on the GDP of municipalities that received royalties. However, the participation of the industry in the GDP of municipalities that received royalties was, on average, 3% lower than those that did not receive royalties. This suggests that the abundance of natural resources could negatively impact the productivity of the economy, intensify specialization in commodity production, and lead to a process of deindustrialization in Brazil. Overall, the article provides evidence supporting the existence of the resource curse phenomenon in Brazil, as well as the negative impact of natural resource dependency on local economic growth. It also highlights the need for policies that address the negative effects of resource dependency and promote economic diversification in resource-rich countries.

Diana Cibulskiene (p), Mindaugas Butkus, Lina Garsviene, Janina Seputiene

Carlos Eduardo Espinel Campos

The global crisis and the Covid-19 pandemic have led to a rise in public debt-to-GDP levels in record volumes worldwide. In this paper, we suggest that the expenditure multiplier mechanism and interactions between its main components may help to explain whether the increase in public debt stimulates or hinders economic growth. Theoretical explanations of debt's effect on growth point to its influence on private consumption, investment, and import, so the impact on the expenditure multiplier can be expected. The value of the expenditure multiplier depends on marginal propensities to consume, invest, import, and tax rate, which has different effects on the multiplier's size – positive in the case of marginal propensities to consume and invest and negative in the case of tax rate and marginal propensity to import. Results show that in countries with relatively low government effectiveness, the impact of debt on economic growth is stronger by a high tax rate than by a high propensity to import. Vice versa, if government effectiveness is relatively high, public debt has a similar effect on economic growth, whether the tax rate is low or high if the propensity to import is low. Therefore, if the public sector dominates the economy, the impact of debt on growth is more influenced by factors other than the multiplier effect. Findings indicate, that if the policymakers would like to achieve that an increase in public debt will have a positive impact on economic growth, they should know, that it is indispensable the relatively high government effectiveness with a high private sector propensity to spend.