Fiscal Sustainability, Public Investment, and Growth in Natural Resource-Rich, Low-Income Countries: The Case of Cameroon
AbstractThis paper assesses the implications of the use of oil revenue for public investment on growth and fiscal sustainability in Cameroon. We develop a dynamic stochastic general equilibrium model to analyze the effects of such investment on growth and on the path of key fiscal indicators, such as the non-oil primary deficit and public debt. Policy scenarios show that Cameroonâ€™s large infrastructural needs and relatively low current debt levels could justify a temporary deviation from traditional policy advice that suggests saving part of the oil revenue to smooth expenditure over time. Model simulations show that a relatively high degree of efficiency of public investment is needed for scaled-up public investment to make a significant contribution to growth, while maintaining fiscal sustainability.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 13/144.
Date of creation: 11 Jun 2013
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-09-24 (All new papers)
- NEP-DGE-2013-09-24 (Dynamic General Equilibrium)
- NEP-ENE-2013-09-24 (Energy Economics)
- NEP-ENV-2013-09-24 (Environmental Economics)
- NEP-PBE-2013-09-24 (Public Economics)
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