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Resource Rents: When to spend and when to save

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  • Anthony J Venables

Abstract

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.

Suggested Citation

  • Anthony J Venables, 2010. "Resource Rents: When to spend and when to save," OxCarre Working Papers 044, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
  • Handle: RePEc:oxf:oxcrwp:044
    as

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    File URL: http://www.oxcarre.ox.ac.uk/images/stories/papers/ResearchPapers/oxcarrerp201044.pdf
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    References listed on IDEAS

    as
    1. Karlygash Kuralbayeva & David Vines, 2008. "Shocks to Terms of Trade and Risk-premium in an Intertemporal Model: The Dutch Disease and a Dutch Party," Open Economies Review, Springer, vol. 19(3), pages 277-303, July.
    2. Robin Boadway & Michael Keen, 2009. "Theoretical Perspectives on Resource Tax Design," Working Papers 1206, Queen's University, Department of Economics.
    3. Gaël Raballand & Ferhat Esen, 2007. "Economics and politics of cross-border oil pipelines—the case of the Caspian basin," Asia Europe Journal, Springer, vol. 5(1), pages 133-146, March.
    Full references (including those not matched with items on IDEAS)

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. How to manage rents from non-renewable resources
      by Economic Logician in Economic Logic on 2010-12-01 21:05:00

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    Cited by:

    1. Melina, Giovanni & Yang, Shu-Chun S. & Zanna, Luis-Felipe, 2016. "Debt sustainability, public investment, and natural resources in developing countries: The DIGNAR model," Economic Modelling, Elsevier, vol. 52(PB), pages 630-649.
    2. Jonathan Temple & Huikang Ying & Patrick Carter, 2014. "Transfers and Transformations: Remittances, Foreign Aid, and Growth," Bristol Economics Discussion Papers 14/649, Department of Economics, University of Bristol, UK, revised 02 Dec 2014.
    3. World Bank, 2013. "Malaysia Economic Monitor, June 2013," World Bank Other Operational Studies 16529, The World Bank.
    4. Batubara, Marwan & Purwanto, Widodo Wahyu & Fauzi, Akhmad, 2016. "Proposing a decision-making process for the development of sustainable oil and gas resources using the petroleum fund: A case study of the East Natuna gas field," Resources Policy, Elsevier, vol. 49(C), pages 372-384.
    5. Keyra Primus, 2016. "Fiscal Rules for Resource Windfall Allocation; The Case of Trinidad and Tobago," IMF Working Papers 16/188, International Monetary Fund.
    6. Artur Grigoryan, 2016. "The ruling bargain: sovereign wealth funds in elite-dominated societies," Economics of Governance, Springer, vol. 17(2), pages 165-184, May.
    7. Jean-Francois Carpantier & Wessel Vermeulen, 2014. "Emergence of Sovereign Wealth Funds," OxCarre Working Papers 148, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.

    More about this item

    Keywords

    Natural resources; revenue management; resource curse; permanent income;

    JEL classification:

    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • H0 - Public Economics - - General

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