Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/161609
Authors: 
van der Ploeg, Frederick
Venables, Anthony J.
Year of Publication: 
2017
Series/Report no.: 
WIDER Working Paper 2017/45
Abstract: 
The prescription of optimally managing natural resource revenue windfalls by smoothing consumption across generations using an intergenerational sovereign wealth fund that only invests in foreign assets is not appropriate for resource-rich developing economies. It is better for these economies to use their windfalls to boost investment in the domestic economy, especially when they confront capital scarcity and have poor access to international capital markets. However, it is important for such economies to have a parking fund to temporarily 'park' funds until absorption constraints are alleviated, and a stabilization fund to smooth out volatile budgets given the high stochastic volatility of commodity prices, especially if the economy is inflexible and has few other ways of adjusting to shocks.
Subjects: 
resource curse
managing windfalls
fiscal rules
JEL: 
E60
F43
H21
H63
O11
Q33
ISBN: 
978-92-9256-269-4
Document Type: 
Working Paper

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