Advanced Search
MyIDEAS: Login to save this paper or follow this series

Management of oil windfalls in Mexico : historical experience and policy options for the future

Contents:

Author Info

  • Everhart, Stephen
  • Duval-Hernandez, Robert

Abstract

The macroeconomic impact of commodity windfalls has provided fertile ground for research since the 1970s. Particularly affected are developing countries that rely heavily on commodity exports. in the case of oil windfalls, cross-country experience is vast: Indonesia, Kazakhstan, Mexico, Nigeria, the Russian Federation, and Republica Bolivariana de Venezuela have all been buffered by such windfalls. The authors investigate Mexico's experience. They provide an overview of oil's impact on the Mexican economy and of the management of oil rents engineered by the government from the 1970s to date. A third of government revenues come from the hydrocarbon sector--especially oil exports. The reliance of public finance on a single commodity means that shocks threaten the economy's fiscal balance and stability. Policy options for protecting the economy from volatility in oil revenues without eliminating the benefits from rising prices include a stabilization fund and hedging strategies on international markets, which the authors discuss. The stabilization fund smoooths consumption and reduces the costs associated volatile spending. The fund and hedging strategies can complement each other--the fund working as the main recipient of revenues, and the hedging strategies managing short-lived movements in prices. This joint strategy would also reduce the size of the fund and the probability of its going bankrupt.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2001/05/11/000094946_01042806383527/Rendered/PDF/multi0page.pdf
Download Restriction: no

Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2592.

as in new window
Length:
Date of creation: 30 Apr 2001
Date of revision:
Handle: RePEc:wbk:wbrwps:2592

Contact details of provider:
Postal: 1818 H Street, N.W., Washington, DC 20433
Phone: (202) 477-1234
Email:
Web page: http://www.worldbank.org/
More information through EDIRC

Related research

Keywords: Economic Theory&Research; Environmental Economics&Policies; Payment Systems&Infrastructure; Financial Intermediation; Labor Policies; Environmental Economics&Policies; Economic Theory&Research; Energy Demand; Oil Refining&Gas Industry; Energy and Environment;

References

References listed on IDEAS
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.:
as in new window
  1. Edwards, Sebastian & Aoki, Masanao, 1983. "Oil export boom and Dutch-disease : A dynamic analysis," Resources and Energy, Elsevier, vol. 5(3), pages 219-242, September.
  2. Kletzer, Kenneth M. & Newbery, David M. & Wright, Brian D., 1990. "Alternative instruments for smoothing the consumption of primary commodity exporters," Policy Research Working Paper Series 558, The World Bank.
  3. Eastwood, R K & Venables, A J, 1982. "The Macroeconomic Implications of a Resource Discovery in an Open Economy," Economic Journal, Royal Economic Society, vol. 92(366), pages 285-99, June.
  4. Hill, Catherine B., 1991. "Managing commodity booms in Botswana," World Development, Elsevier, vol. 19(9), pages 1185-1196, September.
  5. Deaton, Angus, 1991. "Saving and Liquidity Constraints," Econometrica, Econometric Society, vol. 59(5), pages 1221-48, September.
  6. Jeffrey D. Sachs & Andrew M. Warner, 1995. "Natural Resource Abundance and Economic Growth," NBER Working Papers 5398, National Bureau of Economic Research, Inc.
  7. Usui, Norio, 1997. "Dutch disease and policy adjustments to the oil boom: a comparative study of Indonesia and Mexico," Resources Policy, Elsevier, vol. 23(4), pages 151-162, December.
  8. Pinto, Brian, 1987. "Nigeria during and after the Oil Boom: A Policy Comparison with Indonesia," World Bank Economic Review, World Bank Group, vol. 1(3), pages 419-45, May.
  9. Khan, Mohsin S, 1986. "Developing Country Exchange Rate Policy Responses to Exogenous Shocks," American Economic Review, American Economic Association, vol. 76(2), pages 84-87, May.
  10. Tanzi, Vito, 1986. "Fiscal Policy Responses to Exogenous Shocks in Developing Countries," American Economic Review, American Economic Association, vol. 76(2), pages 88-91, May.
  11. van Wijnbergen, Sweder J G, 1984. "The 'Dutch Disease': A Disease after All?," Economic Journal, Royal Economic Society, vol. 94(373), pages 41-55, March.
  12. Balassa, Bela, 1986. "Policy Responses to Exogenous Shocks in Developing Countries," American Economic Review, American Economic Association, vol. 76(2), pages 75-78, May.
  13. Mansoorian, Arman, 1991. "Resource Discoveries and 'Excessive' External Borrowing," Economic Journal, Royal Economic Society, vol. 101(409), pages 1497-509, November.
  14. repec:fth:inadeb:307 is not listed on IDEAS
  15. van Wijnbergen, Sweder, 1984. "Inflation, Employment, and the Dutch Disease in Oil-Exporting Countries: A Short-Run Disequilibrium Analysis," The Quarterly Journal of Economics, MIT Press, vol. 99(2), pages 233-50, May.
  16. Michael Bruno & Jeffrey Sachs, 1982. "Energy and Resource Allocation: A Dynamic Model of the "Dutch Disease"," NBER Working Papers 0852, National Bureau of Economic Research, Inc.
  17. Jan Gunning & Paul Collier, 1996. "Policy towards Commodity Shocks in Developing Countries," IMF Working Papers 96/84, International Monetary Fund.
  18. Feltenstein, Andrew, 1992. "Oil prices and rural migration: the Dutch disease goes south," Journal of International Money and Finance, Elsevier, vol. 11(3), pages 273-291, June.
  19. Usui, Norio, 1996. "Policy adjustments to the oil boom and their evaluation: The Dutch disease in Indonesia," World Development, Elsevier, vol. 24(5), pages 887-900, May.
  20. Neary, J Peter & van Wijnbergen, S, 1984. "Can an Oil Discovery Lead to a Recession? A Comment," Economic Journal, Royal Economic Society, vol. 94(374), pages 390-95, June.
  21. Varangis, Panos & Larson, Don, 1996. "Dealing with commodity price uncertainty," Policy Research Working Paper Series 1667, The World Bank.
  22. Corden, W Max & Neary, J Peter, 1982. "Booming Sector and De-Industrialisation in a Small Open Economy," Economic Journal, Royal Economic Society, vol. 92(368), pages 825-48, December.
  23. Ricardo Hausmann, 1995. "Dealing with Negative Oil Shocks: The Venezuelan Experience in the Eighties," Research Department Publications 4010, Inter-American Development Bank, Research Department.
  24. Aaron Tornell & Philip Lane, 1994. "Are Windfalls a Curse? A Non-Representative Agent Model of the Current Account and Fiscal Policy," NBER Working Papers 4839, National Bureau of Economic Research, Inc.
  25. Corden, W M, 1984. "Booming Sector and Dutch Disease Economics: Survey and Consolidation," Oxford Economic Papers, Oxford University Press, vol. 36(3), pages 359-80, November.
  26. Fardmanesh, M, 1996. "External Shocks and Structural Adjustments : A Dutch Disease Dynamic Analysis," Papers 760, Yale - Economic Growth Center.
  27. Cuddington, John, 1988. "Fiscal policy in commodity-exporting LDCs," Policy Research Working Paper Series 33, The World Bank.
  28. Bruno, Michael & Sachs, Jeffrey, 1982. "Energy and Resource Allocation: A Dynamic Model of the "Dutch Disease"," Review of Economic Studies, Wiley Blackwell, vol. 49(5), pages 845-59, Special I.
  29. Warner, Andrew M., 1994. "Mexico's investment collapse: debt or oil?," Journal of International Money and Finance, Elsevier, vol. 13(2), pages 239-256, April.
  30. Fry, Maxwell J & Lilien, David M, 1986. "Monetary Policy Responses to Exogenous Shocks," American Economic Review, American Economic Association, vol. 76(2), pages 79-83, May.
  31. repec:imf:imfpdp:9421 is not listed on IDEAS
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. World Bank, 2002. "The Republic of Yemen - Economic Growth : Sources, Constraints and Potentials," World Bank Other Operational Studies 15383, The World Bank.
  2. Reyes-Loya, Manuel Lorenzo & Blanco, Lorenzo, 2008. "Measuring the importance of oil-related revenues in total fiscal income for Mexico," Energy Economics, Elsevier, vol. 30(5), pages 2552-2568, September.
  3. Eifert, Benn & Gelb, Alan & Borje Tallroth, Nils, 2002. "The political economy of fiscal policy and economic management in oil exporting countries," Policy Research Working Paper Series 2899, The World Bank.
  4. Breisinger, Clemens & Diao, Xinshen, 2008. "Economic transformation in theory and practice: What are the messages for Africa?," IFPRI discussion papers 797, International Food Policy Research Institute (IFPRI).

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:2592. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.