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Paper Information

Journal:   IRANIAN ECONOMIC RESEARCH   SPRING 2010 , Volume 14 , Number 42; Page(s) 149 To 167.
 
Paper: 

A TEST FOR GROWTH STABILITY IN NON-RENEWABLE RESOURCES, THE CASE OF OPEC

 
 
Author(s):  EMAMI MEIBODI ALI, HAGHDOOST EHSAN, PAKDIN JAVAD
 
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Abstract: 

The increased growth of oil consumption, particularly in developing countries, has turned oil into a strategic commodity in the world. Therefore, identifying factors affecting supply and demand in oil market and the study of price changes are of a great importance. In this article, we have reconsidered the Hotelling model for optimal extraction of non-renewal recourses with regard to the resource effects and technological advances. The cost and demand functions for non-renewable resources are set up in a way to find a stable growth in a system of simultaneous equations of supply and demand. We have utilized data from OPEC in the period 1980- 2006 to test the model and the functions of supply and demand in a system of simultaneous equations using a 3SLS method. The estimation results indicate that the growth rate of the oil price has remained unchangned over rather a long period of time, which is consistent with the theoretical outcomes predicted by the model.

 
Keyword(s): HOTELLING, NON-RENEWABLE RESOURCES, OIL PRICES, TECHNOLOGICAL EFFECT
 
References: 
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