Property Rights, Resource Access, and Long-Run Growth
In this article we use four Canadian Supreme Court decisions that have substantively contributed to the constitutional recognition of aboriginal rights to assess the impact that changes in the security of commercial property rights have had on long-run macroeconomic performance. We use a series of event studies to measure the extent to which each court decision had an effect on the common share prices of Canadian forestry firms. These share price effects reflect investors' perception of the decisions' impact on forestry firms' contemporaneous access to resource stocks and uncertainty surrounding the security of their access into the future. A simulation model based on a resource industry's dynamic optimization problem links the stock access and uncertainty effects implied by our event studies to the commercial producers' economic fundamentals. Changes in the resource industry's simulated profits can be used in a general equilibrium framework to estimate the effect that the Court's decisions had on Canadian real GDP per capita growth during the 1970–2005 period. Our methodological approach allows us to estimate the aggregate, long-run macroeconomic effects that resulted from the Court's recognition of aboriginal rights, and also trace the channels through which these changes in the distribution of property rights influenced performance; we assess the relative importance of the current access and future uncertainty components of these changes. (Read More).