The Resource Paradox

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The Resource Paradox

Lecture notes for 1/21

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Lecture Note
University of Colorado at Boulder
Econ 3535 - Natural Resource Economics

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Lecture 3 Current Lecture Current Events: - Obama State of the Union Address  over the course of 10 years = $320 billion in tax increases - 1) capital gain = appreciation of assets (stocks) o long-term capital gains  tax rate = 20% o Obama = 28% 2) inherited assets - $400K stocks = $1M  $600K capital gain - Obama: tax capital gain on inherited assets  $120K = tax bill (20%) 3) create a $500 tax credit for two-earner households with income cap 4) increase in childcare tax credit from $1,000 to $3,000 a year - 90% of top stocks = owned by 10% of U.S. population - middle class will have more disposable income to spend - interest rates won’t affect wealthy spenders The Resource Paradox: 1 resource pricing 2 currency a GDP  net exports (NX) = measures current account trade i $ value of exports - $ value of imports ii countries that export significant amounts of natural resources tend to have a +NX when resource prices are high iii domestic exports > imports (X = +)  current account surplus 3 currency tends to appreciate a currency appreciation  domestic price of imports decreases b decreasing price imports for domestic consumers c foreign buyers = prices rise 4 exchange rates - assuming that exchange rates have little to no effect on the exports of natural resources ECON 3535 1st Edition

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