This article provides an alternative explanation for the ‘resource curse’ based on the income effect resulting from high government current spending in resource rich economies. Using a simple life cycle framework, we show that private investment in the nonresource sector is adversely...

The gap between potential and actual output—the output gap—is a key variable for policymaking. This paper adapts the methodology developed in Blagrave and others (2015) to estimate the path of output gap in the U.S. economy. The results show that the output gap has considerably shrunk since...