Managing Oil Price Risk in Developing Countries

Posted: 29 Feb 2008

See all articles by Julia Devlin

Julia Devlin

World Bank

Sheridan Titman

University of Texas at Austin - Department of Finance; National Bureau of Economic Research (NBER)

Abstract

This article presents a simple framework for understanding the impact of oil dependence on growth in terms of an optimal savings and investment strategy. Among the more important factors underlying this strategy is the extent to which oil price changes are temporary or permanent. This in turn determines whether a country should rely on stabilization and savings funds or the use of financial instruments to manage oil revenues - or both. Country experiences with stabilization and savings funds are surveyed, and the case is presented for using financial instrument to manage oil price risk. Policy implications for enhancing the use of financial instruments are explored, including an expanded role for international financial institutions.

Suggested Citation

Devlin, Julia and Titman, Sheridan, Managing Oil Price Risk in Developing Countries. World Bank Research Observer, Vol. 19, No. 1, pp. 119-139, Spring 2004. Available at SSRN: https://ssrn.com/abstract=873728

Julia Devlin (Contact Author)

World Bank ( email )

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

Sheridan Titman

University of Texas at Austin - Department of Finance ( email )

Red McCombs School of Business
Austin, TX 78712
United States
512-232-2787 (Phone)
512-471-5073 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Register to save articles to
your library

Register

Paper statistics

Abstract Views
1,297
PlumX Metrics