Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/26616 
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dc.contributor.authorvan der Ploeg, Fredericken
dc.contributor.authorVenables, Anthony J.en
dc.date.accessioned2009-03-17-
dc.date.accessioned2009-07-28T08:48:59Z-
dc.date.available2009-07-28T08:48:59Z-
dc.date.issued2009-
dc.identifier.urihttp://hdl.handle.net/10419/26616-
dc.description.abstractA windfall of natural resource revenue (or foreign aid) faces government with choices of how to manage public debt, investment, and the distribution of funds for consumption, particularly if the windfall is both anticipated and temporary. We show that the permanent income hypothesis prescription of an ever-lasting increase in consumption financed by borrowing ahead of the windfall and then accumulating a Sovereign Wealth Fund (SWF) is not optimal for capital-scarce developing economies. Such countries should accumulate public and private capital to accelerate their development and, only if the windfall is large relative to initial foreign debt, is it optimal to build a SWF. The optimal time profile of consumption is biased towards the near future, as compared to the permanent income hypothesis. Outcomes depend on instruments available to government. We study cases where the government can make lump-sum transfers to consumers; where such transfers are impossible so optimal policy involves cutting distortionary taxation in order to raise investment and wages; and where Ricardian consumers can borrow against future revenues, in which case the policy response to possible over-consumption is a high level of investment in infrastructure.en
dc.language.isoengen
dc.publisher|aCenter for Economic Studies and ifo Institute (CESifo) |cMunichen
dc.relation.ispartofseries|aCESifo Working Paper |x2571en
dc.subject.jelE60en
dc.subject.jelF34en
dc.subject.jelF35en
dc.subject.jelF43en
dc.subject.jelH21en
dc.subject.jelH63en
dc.subject.jelO11en
dc.subject.jelQ33en
dc.subject.ddc330en
dc.subject.keywordNatural resource revenueen
dc.subject.keywordwindfall public revenuesen
dc.subject.keywordrisk premium on foreign debten
dc.subject.keywordpublic infrastructureen
dc.subject.keywordprivate investmenten
dc.subject.keywordcredit constraintsen
dc.subject.keywordoptimal fiscal policyen
dc.subject.keyworddebt managementen
dc.subject.keywordSovereign Wealth Funden
dc.subject.keywordasset holding subsidyen
dc.subject.keyworddeveloping economiesen
dc.subject.stwRohstoffwirtschaften
dc.subject.stwÖffentliche Einnahmenen
dc.subject.stwWindfall Profiten
dc.subject.stwStaatsfondsen
dc.subject.stwFinanzpolitiken
dc.subject.stwInvestitionspolitiken
dc.subject.stwDebt Managementen
dc.subject.stwTheorieen
dc.subject.stwEntwicklungsländeren
dc.titleHarnessing windfall revenues: optimal policies for resource-rich developing economies-
dc.typeWorking Paperen
dc.identifier.ppn593924908en
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen

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