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The Risks of Fiscal Policy in Countries Rich in Natural Resource

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  • Alexander Knobel

    (Gaidar Institute for Economic Policy)

Abstract

The article addresses the issue of fiscal policy risks in countries with an abundance of natural resources, including Russia. It is demonstrated which consequences Russia’s federal budget may be faced with as a result of declining oil prices. In the context of phenomena typical of resource-dependent economies, it is shown that they have a tendency toward a lower rate of long-term economic growth. The macroeconomic and institutional aspects of the resource curse and the role of sovereign funds in shaping up the budget policy are discussed, with a special emphasis being made on their institutional importance.

Suggested Citation

  • Alexander Knobel, 2014. "The Risks of Fiscal Policy in Countries Rich in Natural Resource," Working Papers 0094, Gaidar Institute for Economic Policy, revised 2014.
  • Handle: RePEc:gai:wpaper:0094
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    File URL: http://www.iep.ru/files/RePEc/gai/wpaper/0094Knobel.pdf
    File Function: Revised version, 2013
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    References listed on IDEAS

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    1. Halvor Mehlum & Karl Moene & Ragnar Torvik, 2006. "Institutions and the Resource Curse," Economic Journal, Royal Economic Society, vol. 116(508), pages 1-20, January.
    2. Fernanda Brollo & Tommaso Nannicini & Roberto Perotti & Guido Tabellini, 2013. "The Political Resource Curse," American Economic Review, American Economic Association, vol. 103(5), pages 1759-1796, August.
    3. Sachs, J-D & Warner, A-M, 1995. "Natural Resource Abundance and Economic Growth," Papers 517a, Harvard - Institute for International Development.
    4. Thorvaldur Gylfason, 2007. "The International Economics of Natural Resources and Growth," CESifo Working Paper Series 1994, CESifo Group Munich.
    5. Ola Olsson, 2006. "Diamonds Are a Rebel's Best Friend," The World Economy, Wiley Blackwell, vol. 29(8), pages 1133-1150, August.
    6. Michael Bruno & Jeffrey Sachs, 1982. "Energy and Resource Allocation: A Dynamic Model of the "Dutch Disease"," Review of Economic Studies, Oxford University Press, vol. 49(5), pages 845-859.
    7. Sala-i-Martin, Xavier, 1997. "I Just Ran Two Million Regressions," American Economic Review, American Economic Association, vol. 87(2), pages 178-183, May.
    8. Gylfason, Thorvaldur, 2001. "Natural resources, education, and economic development," European Economic Review, Elsevier, vol. 45(4-6), pages 847-859, May.
    9. Hutchison, Michael M, 1994. "Manufacturing Sector Resiliency to Energy Booms: Empirical Evidence from Norway, the Netherlands, and the United Kingdom," Oxford Economic Papers, Oxford University Press, vol. 46(2), pages 311-329, April.
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    13. S. Guriev & K. Sonin., 2008. "Economics of the Resource Curse," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 4.
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    Cited by:

    1. Georgy Idrisov & Sergey Sinelnikov-Murylev, 2014. "Forming Sources for a Long-run Growth: How to Understand Them?," Working Papers 0096, Gaidar Institute for Economic Policy, revised 2014.
    2. repec:eco:journ2:2017-06-16 is not listed on IDEAS

    More about this item

    Keywords

    resource curse; budget policy; institutions; economic growth; sovereign funds.;

    JEL classification:

    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development

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