Recently, it has become popular among oil-producing countries to establish oil revenue funds, which are believed to stabilize the economy and provide intergenerational redistribution. Oil revenue funds differ depending on rules, such as accumulation rules and withdrawal rules. Numerical simulations show that funds can improve intergenerational social welfare, though not always. Which rule yields the highest intergenerational social welfare depends on countries’ parameters such as gross interest rate, relative risk aversion, and growth rate of oil production. Some rules may be unaffordable for a government budget. If oil production does not decline, funds following expenditure-based accumulation rules yield higher social welfare than funds that follow other rules. If oil production declines, the permanent oil income model or “Bird-in-Hand” can yield the highest social welfare.
ArpaiaAlfonsoTurriniAlessandro. 2008. “Government Expenditure and Economic Growth in the EU: Long-run Tendencies and Short-term Adjustment.” European Commission Directorate-general for Economic and Financial Affairs Economic Papers300:1–45.
2.
ArrauPatricioClaessensStijn. 1992. “Commodity Stabilization Funds.” The World Bank Policy Research Working Paper Series 835. Washington, DC: World Bank.
3.
AzhgaliyevaDina. 2014. “The Effect of Fiscal Policy on Oil Revenue Fund: The Case of Kazakhstan.” Journal of Eurasian Studies5:157–83.
4.
BarroRobert J.2009. “Rare Disasters, Asset Prices, and Welfare Costs.” The American Economic Review99:243–64.
5.
BartschUlrich. 2006. “How Much Is Enough? Monte Carlo Simulations of an Oil Stabilization Fund for Nigeria.” International Monetary Fund Working Paper 06/142. Washington, DC: International Monetary Fund.
6.
CrainMarkDevlinJulia. 2003. “Non-renewable Resource Funds: A Red Herring for Fiscal Stability?Paper presented at the annual meeting of the American Political Science Association, Philadelphia Marriott Hotel, Philadelphia. Accessed November 28, 2016. http://www.allacademic.com/meta/p64142_index.html
7.
DavisJeffrey M.OssowskiRolandoDanielJames A.BarnettSteven. 2003. “Stabilization and Savings Funds for Nonrenewable Resources and Fiscal Policy Implications.” In Fiscal Policy Formulation and Implementation in Oil-producing Countries, edited by DavisJeffrey M.FedelinoAnnalisaOssowskiRolando, 273–315. Washington, DC: International Monetary Fund.
8.
EngelEduardoValdésRodrigo. 2000. “Optimal Fiscal Strategy for Oil Exporting Countries.” International Monetary Fund Working Paper 00/118. Washington, DC: International Monetary Fund.
9.
FurceriDavide. 2007. “Is Government Expenditure Volatility Harmful for Growth? A Cross-country Analysis.” Fiscal Studies28:103–20.
10.
HardingTorfinnPloegRick Van der. 2009. “Is Norway’s Bird-in-Hand Stabilization Fund Prudent Enough? Fiscal Reactions to Hydrocarbon Windfalls and Graying Populations.” CESifo Working Paper Series 2830. Munich: Center for Economic Studies & Ifo Institute.
11.
HartJason. 2010. “Dutch Disease and the Sustainable Management of Royalty Wealth in Western Australia”. Economic Papers29:421–31.
KalyuzhnovaYelena. 2006. “Overcoming the Curse of Hydrocarbon: Goals and Governance in the Oil Funds of Kazakhstan and Azerbaijan.” Comparative Economic Studies48:583–613.
14.
KalyuzhnovaYelena. 2011. “The National Fund of the Republic of Kazakhstan (NFRK): From Accumulation to Stress-test to Global Future.” Energy Policy39:6650–57.
15.
KirabayevaKoralaiParodiFranciscoSaidYahia. 2013. “Iraq: Selected Issues.” International Monetary Fund Country Report 13/218, Washington, DC.
16.
LandonStuartSmithConstance. 2013. “Government Revenue Stabilization Funds: Do They Make Us Better Off?” Canadian Public Policy39:71–99.
17.
MaliszewskiWojciech. 2009. “Fiscal Policy Rules for Oil-producing Countries: A Welfare-based Assessment.” International Monetary Fund Working Paper 09/126. Washington, DC: International Monetary Fund.
18.
MedasPaulo A.ZakharovaDaria. 2009. “A Primer on Fiscal Analysis in Oil-producing Countries.” International Monetary Fund Working Paper 09/56. Washington, DC: International Monetary Fund.
19.
MetropolisNicholasUlamStanislaw. 1949. “The Monte Carlo Method.” Journal of the American Statistical Association44:335–41.
20.
OssowskiRolandoVillafuerteMauricioMedasPaulo A.ThomasTheo. 2008. “Managing the Oil Revenue Boom: The Role of Fiscal Institutions.” International Monetary Fund Occasional Paper 260. Washington, DC: International Monetary Fund.
21.
PalleyThomas I.2003. “Lifting the Natural Resource Curse.” Foreign Service Journal80:54–61.
22.
ShabsighGhiathIlahiNadeem. 2007. “Looking Beyond the Fiscal: Do Oil Funds Bring Macroeconomic Stability?” International Monetary Fund Working Papers 07/96:1–18. Washington, DC: International Monetary Fund.
23.
TakizawaHajimeGardnerEdwardUedaKenichi. 2004. “Are Developing Countries Better Off Spending Their Oil Wealth Upfront?” International Monetary Fund Working Paper 04/141. Washington, DC: International Monetary Fund.
24.
TrumanEdwin. 2007. “Sovereign Wealth Fund Acquisitions and Other Foreign Government Investments in the United States: Assessing the Economic and National Security Implications.” Testimony before the Committee on Banking, Housing, and Urban Affairs, United States Senate, 14.
