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Spatial Channels and Regional Mechanisms of Dutch Disease in Canadian Economy

Shapovalov, Oleksandr LU (2017) EKHM52 20171
Department of Economic History
Abstract
Dutch disease is one of the mechanisms through which the boom in one of the sectors induced by an exogenous shock may have profound adversary implications over the economic growth in the long term. The windfall gains generated from the commodity price increase leads to real exchange rate appreciation boosting wages and prices across all economic sector. As a result, economic growth becomes unsustainable in the long run, while the booming sector experiences diminishing output and shrinkage of resources. The growing interest to the policy methods of strengthening industrial resilience revived the interest in this area. The exhaustive literature is concerned with the mechanism of Dutch disease and case studies testing its symptoms overlooking... (More)
Dutch disease is one of the mechanisms through which the boom in one of the sectors induced by an exogenous shock may have profound adversary implications over the economic growth in the long term. The windfall gains generated from the commodity price increase leads to real exchange rate appreciation boosting wages and prices across all economic sector. As a result, economic growth becomes unsustainable in the long run, while the booming sector experiences diminishing output and shrinkage of resources. The growing interest to the policy methods of strengthening industrial resilience revived the interest in this area. The exhaustive literature is concerned with the mechanism of Dutch disease and case studies testing its symptoms overlooking the hidden spatial and cross-sectoral effects behind its mechanism. It is suggested that evaluating the Dutch disease on lower levels of aggregation could be a helpful tool to decouple underlying cross-sectoral effects. This thesis expands the current research by conceptualizing spatial channels and regional mechanisms of Dutch disease within Canadian economy. First, methodological approach to account for spatial channels behind Dutch disease is developed using the combination of multivariate cointegration analysis with structural breaks and Bayesian dynamic factor model. Second, the thesis contributes to uncovering factors behind productivity shifts and resource movements within Canadian economy, across space and sectors, as well as contributes to understanding of regional disparities emerging between regions with different industrial profiles. (Less)
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author
Shapovalov, Oleksandr LU
supervisor
organization
course
EKHM52 20171
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Dutch disease, economic growth, productivity gap, regional divergence
language
English
id
8954017
date added to LUP
2018-11-20 12:20:07
date last changed
2018-11-20 12:20:07
@misc{8954017,
  abstract     = {Dutch disease is one of the mechanisms through which the boom in one of the sectors induced by an exogenous shock may have profound adversary implications over the economic growth in the long term. The windfall gains generated from the commodity price increase leads to real exchange rate appreciation boosting wages and prices across all economic sector. As a result, economic growth becomes unsustainable in the long run, while the booming sector experiences diminishing output and shrinkage of resources. The growing interest to the policy methods of strengthening industrial resilience revived the interest in this area. The exhaustive literature is concerned with the mechanism of Dutch disease and case studies testing its symptoms overlooking the hidden spatial and cross-sectoral effects behind its mechanism. It is suggested that evaluating the Dutch disease on lower levels of aggregation could be a helpful tool to decouple underlying cross-sectoral effects. This thesis expands the current research by conceptualizing spatial channels and regional mechanisms of Dutch disease within Canadian economy. First, methodological approach to account for spatial channels behind Dutch disease is developed using the combination of multivariate cointegration analysis with structural breaks and Bayesian dynamic factor model. Second, the thesis contributes to uncovering factors behind productivity shifts and resource movements within Canadian economy, across space and sectors, as well as contributes to understanding of regional disparities emerging between regions with different industrial profiles.},
  author       = {Shapovalov, Oleksandr},
  keyword      = {Dutch disease,economic growth,productivity gap,regional divergence},
  language     = {eng},
  note         = {Student Paper},
  title        = {Spatial Channels and Regional Mechanisms of Dutch Disease in Canadian Economy},
  year         = {2017},
}