the economics of exhaustible " assets presents a whole forest of intriguing problems." 1 Harald Hotelling ) The two energy price shocks in 1973/74 and 1979/80 have arosed interest in the new area of resource economics. The affluent societies of Europe, North America and Japan were confronted with the new scarcity paradigm of the "space ship earth" with only a limited supply of natural resources aboard whereas population is growing and the environment can not accomodate the increasing volume of pollutants. The problem of natural resource scarcity gives rise to the question how resource-dependent economies like European coun tries and Japan are affected by an increase in resource prices and how they can adjust to rising energy prices. The new para digm also has focused new interest on the problem of the re source-extracting firm and of the resource-exporting country. The Hotelling revival of resource economics has given new im portance to the behavior and to the policy issues of resource exporting countries.

This paper explores the effect of news shocks on the current account and other macroeconomic variables using worldwide giant oil discoveries as a directly observable measure of news shocks about future output ? the delay between a discovery and production is on average 4 to 6 years. We first present a two-sector small open economy model in order to predict the responses of macroeconomic aggregates to news of an oil discovery. We then estimate the effects of giant oil discoveries on a large panel of countries. Our empirical estimates are consistent with the predictions of the model. After an oil discovery, the current account and saving rate decline for the first 5 years and then rise sharply during the ensuing years. Investment rises robustly soon after the news arrives, while GDP does not increase until after 5 years. Employment rates fall slightly for a sustained period of time.

How to use nonlinear dynamic models in policy analysis. Policymakers need quantitative as well as qualitative answers to pressing policy questions. Because of advances in computational methods, quantitative estimates are now derived from coherent nonlinear dynamic macroeconomic models embodying measures of risk and calibrated to capture specific characteristics of real-world situations. This text shows how such models can be made accessible and operational for confronting policy issues. The book starts with a simple setting based on market-clearing price flexibility. It gradually incorporates departures from the simple competitive framework in the form of price and wage stickiness, taxes, rigidities in investment, financial frictions, and habit persistence in consumption. Most chapters end with computational exercises; the Matlab code for the base model can be found in the appendix. As the models evolve, readers are encouraged to modify the codes from the first simple model to more complex extensions. Computational Macroeconomics for the Open Economy can be used by graduate students in economics and finance as well as policy-oriented researchers.

"A study prepared by the United Nations University World Institute for Development Economics Research (UNU-WIDER)".

A comprehensive analysis of natural resource use and economic development in poor countries, first published in 2005.