Managing and harnessing volatile oil windfalls
Three funds are necessary to manage an oil windfall: intergenerational, liquidity and investment funds. The optimal liquidity fund is bigger if the windfall lasts longer and oil price volatility, prudence and the GDP share of oil rents are high and productivity growth is low. We apply our theory to...
| Main Authors: | , |
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| Format: | Working paper |
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University of Oxford
2012
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| _version_ | 1826284027603058688 |
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| author | Van der Ploeg, R van den Bremer, T |
| author_facet | Van der Ploeg, R van den Bremer, T |
| author_sort | Van der Ploeg, R |
| collection | OXFORD |
| description | Three funds are necessary to manage an oil windfall: intergenerational, liquidity and investment funds. The optimal liquidity fund is bigger if the windfall lasts longer and oil price volatility, prudence and the GDP share of oil rents are high and productivity growth is low. We apply our theory to the windfalls of Norway, Iraq and Ghana. The optimal size of Ghana's liquidity fund is tiny even with high prudence. Norway's liquidity fund is bigger than Ghana's. Iraq's liquidity fund is colossal relative to its intergenerational fund. Only with capital scarcity, part of the windfall should be used for investing to invest. We illustrate how this can speed up the process of development in Ghana despite domestic absorption constraints. |
| first_indexed | 2024-03-07T01:07:41Z |
| format | Working paper |
| id | oxford-uuid:8be90426-305d-4ace-be23-0b299ee7ae39 |
| institution | University of Oxford |
| last_indexed | 2024-03-07T01:07:41Z |
| publishDate | 2012 |
| publisher | University of Oxford |
| record_format | dspace |
| spelling | oxford-uuid:8be90426-305d-4ace-be23-0b299ee7ae392022-03-26T22:41:11ZManaging and harnessing volatile oil windfallsWorking paperhttp://purl.org/coar/resource_type/c_8042uuid:8be90426-305d-4ace-be23-0b299ee7ae39Bulk import via SwordSymplectic ElementsUniversity of Oxford2012Van der Ploeg, Rvan den Bremer, TThree funds are necessary to manage an oil windfall: intergenerational, liquidity and investment funds. The optimal liquidity fund is bigger if the windfall lasts longer and oil price volatility, prudence and the GDP share of oil rents are high and productivity growth is low. We apply our theory to the windfalls of Norway, Iraq and Ghana. The optimal size of Ghana's liquidity fund is tiny even with high prudence. Norway's liquidity fund is bigger than Ghana's. Iraq's liquidity fund is colossal relative to its intergenerational fund. Only with capital scarcity, part of the windfall should be used for investing to invest. We illustrate how this can speed up the process of development in Ghana despite domestic absorption constraints. |
| spellingShingle | Van der Ploeg, R van den Bremer, T Managing and harnessing volatile oil windfalls |
| title | Managing and harnessing volatile oil windfalls |
| title_full | Managing and harnessing volatile oil windfalls |
| title_fullStr | Managing and harnessing volatile oil windfalls |
| title_full_unstemmed | Managing and harnessing volatile oil windfalls |
| title_short | Managing and harnessing volatile oil windfalls |
| title_sort | managing and harnessing volatile oil windfalls |
| work_keys_str_mv | AT vanderploegr managingandharnessingvolatileoilwindfalls AT vandenbremert managingandharnessingvolatileoilwindfalls |