'How To' of Fiscal Sustainability in Oil-Rich Countries: The Case of Azerbaijan

20 Pages Posted: 2 Feb 2012

See all articles by Luca Bandiera

Luca Bandiera

World Bank

Nina Budina

World Bank

Sweder van Wijnbergen

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

Date Written: April 3, 2008

Abstract

Assessing fiscal sustainability – i.e. considering whether or not a country can maintain its current fiscal policies without running into solvency problems and possible default – requires projections on a government’s future revenue stream, expenditures and contingent liabilities within a macroeconomic framework. Such an exercise is always subject to uncertainty. In commodity-rich countries dependent upon resource revenues, this is intensified by unpredictable and volatile commodity prices. We apply the Framework for Fiscal Sustainability and Managing Uncertainty to Azerbaijan: we explore the link between non-oil primary deficit and Oil Fund allocation rules and assess their impact on fiscal sustainability in Azerbaijan and allow for explicit analysis of the effects of uncertainty through scenario analysis and full stochastic analysis allowing Value-at-Risk assessments.

Suggested Citation

Bandiera, Luca and Budina, Nina and van Wijnbergen, Sweder, 'How To' of Fiscal Sustainability in Oil-Rich Countries: The Case of Azerbaijan (April 3, 2008). Available at SSRN: https://ssrn.com/abstract=1996482 or http://dx.doi.org/10.2139/ssrn.1996482

Luca Bandiera (Contact Author)

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Nina Budina

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Sweder Van Wijnbergen

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

Register to save articles to
your library

Register

Paper statistics

Downloads
87
Abstract Views
590
rank
290,313
PlumX Metrics