Extractive revenues and government spending: Short- versus long-term considerations
The prescription of optimally managing natural resource revenue windfalls by smoothing consumption across generations using an intergenerational sovereign wealth fund that only invests in foreign assets is not appropriate for resource-rich developing economies. It is better for these economies to us...
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| Format: | Working paper |
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United Nations University World Institute for Development Economics Research
2017
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| _version_ | 1797097625143476224 |
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| author | van der Ploeg, F Venables, A |
| author_facet | van der Ploeg, F Venables, A |
| author_sort | van der Ploeg, F |
| collection | OXFORD |
| description | The prescription of optimally managing natural resource revenue windfalls by smoothing consumption across generations using an intergenerational sovereign wealth fund that only invests in foreign assets is not appropriate for resource-rich developing economies. It is better for these economies to use their windfalls to boost investment in the domestic economy, especially when they confront capital scarcity and have poor access to international capital markets. However, it is important for such economies to have a parking fund to temporarily ‘park’ funds until absorption constraints are alleviated, and a stabilization fund to smooth out volatile budgets given the high stochastic volatility of commodity prices, especially if the economy is inflexible and has few other ways of adjusting to shocks. |
| first_indexed | 2024-03-07T04:58:08Z |
| format | Working paper |
| id | oxford-uuid:d750939b-aae3-4166-90ac-6bc50e5a6334 |
| institution | University of Oxford |
| last_indexed | 2024-03-07T04:58:08Z |
| publishDate | 2017 |
| publisher | United Nations University World Institute for Development Economics Research |
| record_format | dspace |
| spelling | oxford-uuid:d750939b-aae3-4166-90ac-6bc50e5a63342022-03-27T08:40:13ZExtractive revenues and government spending: Short- versus long-term considerationsWorking paperhttp://purl.org/coar/resource_type/c_8042uuid:d750939b-aae3-4166-90ac-6bc50e5a6334Symplectic Elements at OxfordUnited Nations University World Institute for Development Economics Research2017van der Ploeg, FVenables, AThe prescription of optimally managing natural resource revenue windfalls by smoothing consumption across generations using an intergenerational sovereign wealth fund that only invests in foreign assets is not appropriate for resource-rich developing economies. It is better for these economies to use their windfalls to boost investment in the domestic economy, especially when they confront capital scarcity and have poor access to international capital markets. However, it is important for such economies to have a parking fund to temporarily ‘park’ funds until absorption constraints are alleviated, and a stabilization fund to smooth out volatile budgets given the high stochastic volatility of commodity prices, especially if the economy is inflexible and has few other ways of adjusting to shocks. |
| spellingShingle | van der Ploeg, F Venables, A Extractive revenues and government spending: Short- versus long-term considerations |
| title | Extractive revenues and government spending: Short- versus long-term considerations |
| title_full | Extractive revenues and government spending: Short- versus long-term considerations |
| title_fullStr | Extractive revenues and government spending: Short- versus long-term considerations |
| title_full_unstemmed | Extractive revenues and government spending: Short- versus long-term considerations |
| title_short | Extractive revenues and government spending: Short- versus long-term considerations |
| title_sort | extractive revenues and government spending short versus long term considerations |
| work_keys_str_mv | AT vanderploegf extractiverevenuesandgovernmentspendingshortversuslongtermconsiderations AT venablesa extractiverevenuesandgovernmentspendingshortversuslongtermconsiderations |