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Nonrenewable Resources; A Case for Persistent Fiscal Surpluses

Author

Listed:
  • Max Alier
  • Martin D Kaufman

Abstract

This paper examines whether there is a case for temporary but persistent fiscal surpluses in economies heavily endowed with nonrenewable resources. It finds that there generally is a case. Fiscal surpluses permit replacing nonfinancial wealth with financial assets, the return on which increases public consumption possibilities of future generations for a constant across-generation tax burden. The more biased are a government’s preferences toward present generations, the lower will be the initial surpluses; the larger the finite endowment, the larger the initial surpluses. In a more general framework, including public investment, the proposition could be rephrased by replacing surpluses with stronger initial fiscal positions.

Suggested Citation

  • Max Alier & Martin D Kaufman, 1999. "Nonrenewable Resources; A Case for Persistent Fiscal Surpluses," IMF Working Papers 99/44, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:99/44
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    Cited by:

    1. Thomas Baunsgaard, 2003. "Fiscal Policy in Nigeria; Any Role for Rules?," IMF Working Papers 03/155, International Monetary Fund.
    2. Joseph Ntamatungiro, 2004. "Fiscal Sustainability in Heavily Indebted Countries Dependenton Nonrenewable Resources; The Case of Gabon," IMF Working Papers 04/30, International Monetary Fund.
    3. World Bank, 2003. "A Medium-Term Macroeconomic Strategy for Algeria : Sustaining Faster Growth with Economic and Social Stability, Volume 1. Main Report," World Bank Other Operational Studies 14999, The World Bank.
    4. World Bank, 2003. "Azerbaijan : Public Expenditure Review," World Bank Other Operational Studies 13825, The World Bank.

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