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Fiscal Institutions in Resource-Rich Economies: Lessons from Chile and Norway

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  • Klaus Schmidt-Hebbel

Abstract

Resource-rich economies in general, and Arab oil exporters in particular, are at a critical juncture, facing the challenge of revamping their fiscal policy institutions and conduct to strengthen macroeconomic and financial stability, raise growth, and improve intra/inter-generational equity. This paper starts by reviewing the international evidence on fiscal policies and outcomes in resource-rich economies at large and Arab oil-exporting countries in particular, which suggests that strong fiscal (and political) institutions can turn the resource curse into a blessing. Then the paper provides comparative reviews of Chile’s and Norway’s decade-long experience in setting up new fiscal institutions and rules to manage their resource rents, aiming at and, in fact, attaining more macroeconomic and financial stability, higher growth, and improved equity. Specific reform lessons to strengthen fiscal institutions and policies are drawn for resource-rich economies and Arab oil exporters.

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Bibliographic Info

Paper provided by Instituto de Economia. Pontificia Universidad Católica de Chile. in its series Documentos de Trabajo with number 416.

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Date of creation: 2012
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Handle: RePEc:ioe:doctra:416

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Keywords: Fiscal institutions; Fiscal rules; Resource-rich economies; Chile; Norway;

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  1. Alberto F. Alesina & Roberto Perotti, 1999. "Budget Deficits and Budget Institutions," NBER Chapters, in: Fiscal Institutions and Fiscal Performance, pages 13-36 National Bureau of Economic Research, Inc.
  2. Hanan Morsy, 2010. "Current Account Determinants For Oil-Exporting Countries," Working Papers 511, Economic Research Forum, revised Mar 2010.
  3. John Thornton & Fabian Bornhorst & Sanjeev Gupta, 2008. "Natural Resource Endowments, Governance, and the Domestic Revenueeffort," IMF Working Papers 08/170, International Monetary Fund.
  4. Alesina, Alberto F & Ardagna, Silvia & Perotti, Roberto & Schiantarelli, Fabio, 1999. "Fiscal Policy, Profits and Investment," CEPR Discussion Papers 2250, C.E.P.R. Discussion Papers.
  5. Ibrahim Ahmed Elbadawi & Raimundo Soto, 2012. "Resource Rents, Political Institutions and Economic Growth," Documentos de Trabajo 413, Instituto de Economia. Pontificia Universidad Católica de Chile..
  6. Xavier Debrun & David Hauner & Manmohan S. Kumar, 2009. "Independent Fiscal Agencies," Journal of Economic Surveys, Wiley Blackwell, vol. 23(1), pages 44-81, 02.
  7. Leandro Medina & Carlos Caceres & Ana Corbacho, 2010. "Structural Breaks in Fiscal Performance," IMF Working Papers 10/248, International Monetary Fund.
  8. Eijffinger, Sylvester C W & Geraats, Petra M & van der Cruijsen, Carin A B, 2006. "Does Central Bank Transparency Reduce Interest Rates?," CEPR Discussion Papers 5526, C.E.P.R. Discussion Papers.
  9. Xavier Debrun & Manmohan S. Kumar, 2007. "The Discipline-Enhancing Role of Fiscal Institutions," IMF Working Papers 07/171, International Monetary Fund.
  10. Nisreen Salti, 2008. "Oil Greasing the Wheels: When Do Natural Resources Become a Blessing?," Working Papers 439, Economic Research Forum, revised Sep 2008.
  11. Ethan Ilzetzki & Carlos A. Vegh, 2008. "Procyclical Fiscal Policy in Developing Countries: Truth or Fiction?," NBER Working Papers 14191, National Bureau of Economic Research, Inc.
  12. César Calderón & Roberto Duncan & Klaus Schmidt-Hebbel., 2010. "Institutions and Cyclical Properties of Macroeconomic Policies in the Global Economy," Documentos de Trabajo 372, Instituto de Economia. Pontificia Universidad Católica de Chile..
  13. Petra M. Geraats, 2008. "ECB Credibility and Transparency," European Economy - Economic Papers 330, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  14. Larraín B., Felipe & Parro, Francisco, 2008. "Chile menos volátil," El Trimestre Económico, Fondo de Cultura Económica, vol. 0(299), pages 563-596, julio-sep.
  15. Marcel, Mario, 2001. "Balance Estructural del Gobierno Central. Metodología y Estimaciones para Chile
    [Structural Bazlance of Central Government. Methodology and estimates for Chile]
    ," MPRA Paper 43338, University Library of Munich, Germany.
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