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Resource Revenues and Fiscal Sustainability in Alberta

Author

Listed:
  • Leslie Shiell

    (Department of Economics, University of Ottawa)

  • Colin Busby

    (C.D. Howe Institute)

Abstract

Alberta’s public finances depend upon volatile revenues from an exhaustible resource base. The question arises of what proportion of current resource revenues the government should spend on current priorities and what proportion it should save for future generations. The paper uses the Permanent Resource Income Model to answer the following four questions: Has Alberta saved enough of its resource revenues to date? What level of spending out of resource wealth is sustainable moving forward? What are the implications of a sustainable policy for the province’s current budget planning? Should Alberta follow Norway’s example of saving all of its resource revenues in a fund and spending only the resulting investment income?

Suggested Citation

  • Leslie Shiell & Colin Busby, 2008. "Resource Revenues and Fiscal Sustainability in Alberta," Working Papers 0807E, University of Ottawa, Department of Economics.
    • Handle: RePEc:ott:wpaper:0807e
    as

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    File URL: http://sciencessociales.uottawa.ca/economics/sites/socialsciences.uottawa.ca.economics/files/0807.pdf
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    References listed on IDEAS

    as
    1. Gunnar Tersman, 1991. "Oil, National Wealth, and Current and Future Consumption Possibilities," IMF Working Papers 1991/060, International Monetary Fund.
    2. Milton Friedman, 1957. "Introduction to "A Theory of the Consumption Function"," NBER Chapters, in: A Theory of the Consumption Function, pages 1-6, National Bureau of Economic Research, Inc.
    3. International Monetary Fund, 2002. "Republic of Kazakhstan: Selected Issues and Statistical Appendix," IMF Staff Country Reports 2002/064, International Monetary Fund.
    4. International Monetary Fund, 2002. "Federal Republic of Yugoslavia: Selected Issues and Statistical Appendix," IMF Staff Country Reports 2002/103, International Monetary Fund.
    5. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1, March.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Peter W. Hogg, 2008. "A Question of Parliamentary power: Criminal Law and the Control of Greenhouse Gas Emissions," C.D. Howe Institute Backgrounder, C.D. Howe Institute, issue 114, August.
    2. Serge Coulombe, 2011. "Lagging Behind: Productivity and the Good Fortune of Canadian Provinces," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 331, June.

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    More about this item

    Keywords

    Natural resource revenues; Fiscal sustainability;

    JEL classification:

    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)

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