Journal Article

Resource Funds: Stabilising, Parking, and Inter-generational Transfer

Anthony J. Venables and Samuel E. Wills

in Journal of African Economies

Volume 25, issue suppl_2, pages ii20-ii40
Published in print September 2016 | ISSN: 0963-8024
Published online October 2016 | e-ISSN: 1464-3723 | DOI: https://dx.doi.org/10.1093/jae/ejw016

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  • Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
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The paper explores strategies for managing revenue from natural resources, focusing on the balance between domestic and foreign asset accumulation. It suggests that domestic asset accumulation is the priority in developing countries, while there are three motives for accumulating foreign assets; inter-generational transfer, temporary ‘parking’ of funds, and stabilisation. The paper argues that the first of these is inappropriate for low income countries. The second is required if it is difficult to absorb extra spending in the domestic economy and takes time to build up domestic investment. The third is important, and depends on the extent to which the economy has other ways of adjusting to shocks.

Keywords: resource curse; managing windfalls; fiscal rules; volatility; absorptive capacity; Dutch disease; public investment; E60; F34; F35; F43; H21; H63; O11; Q33

Journal Article.  9815 words.  Illustrated.

Subjects: Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook ; International Finance ; Macroeconomic Aspects of International Trade and Finance ; Taxation, Subsidies, and Revenue ; National Budget, Deficit, and Debt ; Economic Development ; Non-renewable Resources and Conservation

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