We thank Christos Kostopoulos of the World Bank for many discussions on the Azerbaijan case study, and Alexander France (UvA), the editor and the two referees for their many constructive comments.
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Fiscal sustainability, volatility and oil wealth
A stochastic analysis of fiscal spending rules1
Article first published online: 21 SEP 2011
DOI: 10.1111/j.1468-0351.2011.00425.x
© 2011 The Authors. Economics of Transition © 2011 The European Bank for Reconstruction and Development
Additional Information
How to Cite
van Wijnbergen, S. and Budina, N. (2011), Fiscal sustainability, volatility and oil wealth. Economics of Transition, 19: 639–666. doi: 10.1111/j.1468-0351.2011.00425.x
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Publication History
- Issue published online: 21 SEP 2011
- Article first published online: 21 SEP 2011
- Received: October 30, 2008; Acceptance: April 13, 2011
- Abstract
- Article
- References
- Cited By
Keywords:
- E27;
- E62;
- H63;
- H68;
- O13;
- Q38
- Volatility;
- oil wealth;
- fiscal sustainability
Abstract
Whether fiscal policy is sustainable depends on a government’s future revenue and expenditure streams, both of which are highly uncertain. In commodity-rich countries, this problem is intensified by unpredictable and volatile commodity prices. We show how spending rules for oil income and non-oil primary deficits interact and influence the stochastic distribution of future debt stocks and demonstrate the variance reducing impact of feedback rules for primary deficits in a case study of oil-and-gas exporter Azerbaijan.
