Fiscal Sustainability, Volatility and Oil Wealth

28 Pages Posted: 22 Sep 2011

See all articles by Sweder van Wijnbergen

Sweder van Wijnbergen

Universiteit van Amsterdam; Tinbergen Institute; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Nina T. Budina

International Monetary Fund

Date Written: October 2011

Abstract

Whether fiscal policy is sustainable depends on a government’s future revenue and expenditure streams, both of which are highly uncertain. In commodity‐rich countries, this problem is intensified by unpredictable and volatile commodity prices. We show how spending rules for oil income and non‐oil primary deficits interact and influence the stochastic distribution of future debt stocks and demonstrate the variance reducing impact of feedback rules for primary deficits in a case study of oil‐and‐gas exporter Azerbaijan.

Keywords: E27, E62, H63, H68, O13, Q38, Volatility, oil wealth, fiscal sustainability

Suggested Citation

van Wijnbergen, Sweder and Budina, Nina T., Fiscal Sustainability, Volatility and Oil Wealth (October 2011). Economics of Transition, Vol. 19, Issue 4, pp. 639-666, 2011. Available at SSRN: https://ssrn.com/abstract=1932019 or http://dx.doi.org/10.1111/j.1468-0351.2011.00425.x

Sweder Van Wijnbergen (Contact Author)

Universiteit van Amsterdam ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands
+31 20 525 4011 / 4203 (Phone)
+31-35-624 91 82 (Fax)

Tinbergen Institute

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Nina T. Budina

International Monetary Fund ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

HOME PAGE: http://www.imf.org

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