Fiscal Policy Rules for Oil-Producing Countries: A Welfare-Based Assessment
AbstractThe paper presents numerical simulations of various fiscal rules for oil-producing countries. Welfare implications are sensitive to the choice of the social welfare function, initial conditions, and non-oil growth prospects. The distribution of non-oil wealth is important for countries with relatively low oil reserves. Corrections for adjustment costs and uncertainty with respect to oil prices should be applied carefully. While avoiding sharp changes in the fiscal policy stance may be appealing, it is not necessarily optimal if the initial position is unsustainable. Ad hoc rules are shown to perform poorly. The analysis abstracts from several issues critical for developing a practical policy advice and should not be treated as a complete framework.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 09/126.
Date of creation: 01 Jun 2009
Date of revision:
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-10-10 (All new papers)
- NEP-ARA-2009-10-10 (MENA - Middle East & North Africa)
- NEP-CBA-2009-10-10 (Central Banking)
- NEP-ENE-2009-10-10 (Energy Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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IMF Working Papers
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- Jan-Peter Olters, 2007. "Old Curses, New Approaches? Fiscal Benchmarks for Oil-Producing Countries in Sub-Saharan Africa," IMF Working Papers 07/107, International Monetary Fund.
- Eduardo Engel & Christopher Neilson & Rodrigo Valdés, 2011. "Chile’s Fiscal Rule as Social Insurance," Working Papers Central Bank of Chile 627, Central Bank of Chile.
- Roberto Iacono, 2012. "Is it really worse with a Bird in Hand? A comparison of fiscal rules for resource-rich economies," Working Paper Series 12612, Department of Economics, Norwegian University of Science and Technology.
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