Resource rents; when to spend and how to save
Countries with substantial revenues from renewable resources face a complex range of revenue management issues. What is the optimal time profile of consumption from the revenue, and how much should be saved? Should saving be invested in foreign funds or in the domestic economy? How does government policy influence the private sector, where sustainable growth in the domestic economy must ultimately be generated? This paper develops the issues in a simple two-period model, and argues that analysis must go well beyond the simple permanent income approach sometimes recommended. In developing countries resource revenues relax constraints on the supplies of capital and of government funds. The level of saving should be somewhat lower than under the permanent income hypothesis because of the low income of the current generation. The composition of investment should be tilted to the domestic economy rather than foreign assets. Government prudence can be undermined by private sector expectations, so high levels of spending on public infrastructure may be appropriate as a commitment to invest.
(This abstract was borrowed from another version of this item.)
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.:
- Paul Collier and Anthony J. Venables, 2010.
"Natural Resources and State Fragility,"
EUI-RSCAS Working Papers
36, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
- Paul Collier & Anthony J Venables, 2009. "Natural Resources and State Fragility," OxCarre Working Papers 031, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
- Paul Collier & Anthony J. Venables, 2010. "Natural Resources and State Fragility," RSCAS Working Papers 2010/36, European University Institute.
- Bernardin Akitoby & Thomas Stratmann, 2006.
"Fiscal Policy and Financial Markets,"
IMF Working Papers
06/16, International Monetary Fund.
- Mauricio Villafuerte & Rolando Ossowski & Theo Thomas & Paulo A Medas, 2008. "Managing the Oil Revenue Boom; The Role of Fiscal Institutions," IMF Occasional Papers 260, International Monetary Fund.
- Besley, Timothy J. & Persson, Torsten, 2008.
"The Incidence of Civil War: Theory and Evidence,"
CEPR Discussion Papers
7101, C.E.P.R. Discussion Papers.
- Timothy Besley & Torsten Persson, 2009. "The Incidence of Civil War: Theory and Evidence," STICERD - Economic Organisation and Public Policy Discussion Papers Series 005, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Timothy J. Besley & Torsten Persson, 2008. "The Incidence of Civil War: Theory and Evidence," NBER Working Papers 14585, National Bureau of Economic Research, Inc.
- Christopher Adam & Anthony Simpasa, 2010. "Harnessing Resource Revenues for Prosperity in Zambia," OxCarre Working Papers 036, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
- Miles S. Kimball, 1989.
"Precautionary Saving in the Small and in the Large,"
NBER Working Papers
2848, National Bureau of Economic Research, Inc.
- Kimball, Miles S, 1990. "Precautionary Saving in the Small and in the Large," Econometrica, Econometric Society, vol. 58(1), pages 53-73, January.
- Sambit Bhattacharyya & Roland Hodler, 2008.
"Natural Resources, Democracy and Corruption,"
OxCarre Working Papers
020, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
- Bernard Gauthier & Albert Zeufack, 2010. "Governance and Oil Revenues in Cameroon," OxCarre Working Papers 038, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
- 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.
When requesting a correction, please mention this item's handle: RePEc:kap:itaxpf:v:17:y:2010:i:4:p:340-356. 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: (Sonal Shukla)or (Rebekah McClure)
If references are entirely missing, you can add them using this form.