This paper investigates the dynamic impact of natural resource discoveries on government debt sustainability. We use a 'natural experiment' framework in which the timing of discoveries is treated as an exogenous source of within-country variation. We combine data on government debt, fiscal...

Developing economies with high levels of open or hidden unemployment face structural transformation problems. Unlike in mature economies there are no structural aggregate demand problems, and sustained aggregate demand stimulus can lead to a profit squeeze in the modern sector and...