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Fiscal Institutions in Resource-Rich Economies: Lessons from Chile and Norway

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  • Klaus Schmidt-Hebbel

Abstract

Resource-rich economies in general, and Arab oil exporters in particular, are at a critical juncture, facing the challenge of revamping their fiscal policy institutions and conduct to strengthen macroeconomic and financial stability, raise growth, and improve intra/inter-generational equity. This paper starts by reviewing the international evidence on fiscal policies and outcomes in resource-rich economies at large and Arab oil-exporting countries in particular, which suggests that strong fiscal (and political) institutions can turn the resource curse into a blessing. Then the paper provides comparative reviews of Chile's and Norway's decade-long experience in setting up new fiscal institutions and rules to manage their resource rents, aiming at and, in fact, attaining more macroeconomic and financial stability, higher growth, and improved equity. Specific reform lessons to strengthen fiscal institutions and policies are drawn for resource-rich economies and Arab oil exporters.

Suggested Citation

  • Klaus Schmidt-Hebbel, 2012. "Fiscal Institutions in Resource-Rich Economies: Lessons from Chile and Norway," Documentos de Trabajo 416, Instituto de Economia. Pontificia Universidad Católica de Chile..
  • Handle: RePEc:ioe:doctra:416
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    File URL: http://www.economia.uc.cl/docs/dt_416.pdf
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    References listed on IDEAS

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    1. Lars Calmfors & Simon Wren‐Lewis, 2011. "What should fiscal councils do?," Economic Policy, CEPR;CES;MSH, vol. 26(68), pages 649-695, October.
    2. International Monetary Fund, 2010. "Fiscal Policy in Oil Producing Countries During the Recent Oil Price Cycle," IMF Working Papers 10/28, International Monetary Fund.
    3. Ernesto Stein & Ernesto Talvi & Alejandro Grisanti, 1999. "Institutional Arrangements and Fiscal Performance: The Latin American Experience," NBER Chapters,in: Fiscal Institutions and Fiscal Performance, pages 103-134 National Bureau of Economic Research, Inc.
    4. Geraats, P. & Eijffinger, S.C.W. & van der Cruijsen, C.A.B., 2006. "Does Central Bank Transparancy Reduce Interest Rates?," Discussion Paper 2006-11, Tilburg University, Center for Economic Research.
    5. Alberto F. Alesina & Roberto Perotti, 1999. "Budget Deficits and Budget Institutions," NBER Chapters,in: Fiscal Institutions and Fiscal Performance, pages 13-36 National Bureau of Economic Research, Inc.
    6. Alberto Alesina & Silvia Ardagna & Roberto Perotti & Fabio Schiantarelli, 2002. "Fiscal Policy, Profits, and Investment," American Economic Review, American Economic Association, vol. 92(3), pages 571-589, June.
    7. Xavier Debrun & David Hauner & Manmohan S. Kumar, 2009. "Independent Fiscal Agencies," Journal of Economic Surveys, Wiley Blackwell, vol. 23(1), pages 44-81, February.
    8. Petra M. Geraats, 2008. "ECB Credibility and Transparency," European Economy - Economic Papers 2008 - 2015 330, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    9. Sambit Bhattacharyya & Paul Collier, 2014. "Public capital in resource rich economies: is there a curse?," Oxford Economic Papers, Oxford University Press, vol. 66(1), pages 1-24, January.
    10. Sambit Bhattacharyya & Paul Collier, 2014. "Public capital in resource rich economies: is there a curse?," Oxford Economic Papers, Oxford University Press, vol. 66(1), pages 1-24, January.
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    Cited by:

    1. Raimundo Soto & Ilham Haouas, 2012. "Has the UAE Escaped the Oil Curse?," Working Papers 728, Economic Research Forum, revised 2012.
    2. Ghassan Dibeh, 2014. "The Political Economy of Monetary Policy in Resource-Rich Arab Economies," Working Papers 896, Economic Research Forum, revised Dec 2014.
    3. World Bank Group, 2017. "Gulf Economic Monitor, June 2017," World Bank Other Operational Studies 27473, The World Bank.
    4. Mahmoud Al Iriani & Yahsob Al Eriani, 2015. "Fiscal Institutions and Macroeconomic Managment in Resource Rich Economies: the Case of Yemen," Working Papers 935, Economic Research Forum, revised Aug 2015.

    More about this item

    Keywords

    Fiscal institutions; Fiscal rules; Resource-rich economies; Chile; Norway;

    JEL classification:

    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems

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