Title Investing volatile oil revenues in capital-scarce economies : an application to Angola / prepared by Christine J. Richmond, Irene Yackovlev and Shu-Chun S. Yang

Published Washington, D.C. : International Monetary Fund, 2013

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Description 1 online resource (33 pages :) : illustrations Series IMF working paper ; WP/13/147 IMF working paper ; WP/13/147. Contents Cover; Contents; I. Introduction; II. A Brief Literature Review; III. Model Description; A. Households; B. Firms; C. The Government; D. Fiscal Policy; E. Some Market Clearing Conditions and Identities; IV. Equilibrium, Solution Method, and Calibration; V. Spend-As-You-Go vs. Gradual Scaling-Up; A. Baseline Scenario; B. Alternative Scenario; C. Stabilization Effect of the Gradual Scaling-Up Approach; VI. Determining a Sustainable Investing Path; VII. Conclusion; Tables; 1. Parameter Calibration; 2. Stabilization Effects with Gradual Scaling-up; Figures; 1. Baseline Scenario 2. Alternative Scenario3. Conservative vs. Aggressive Investing Scaling-up I; 4. Conservative vs. Aggressive Investing Scaling-up II; Appendices; I. Implementing the Gradual Scaling-Up Approach; II. Optimality Conditions; References Summary Natural resource revenues are an increasingly important financing source for public investment in many developing economies. Investing volatile resource revenues, however, may subject an economy to macroeconomic instability. This paper applies to Angola the fiscal framework developed in Berg et al. (forthcoming) that incorporates investment inefficiency and absorptive capacity constraints, often encountered in developing countries. The sustainable investing approach, which combines a stable fiscal regime with external savings, can convert resource wealth to development gains while maintaining economic stability. Stochastic simulations demonstrate how the framework can be used to inform allocations between capital spending and external savings when facing uncertain oil revenues. An overly aggressive investment scaling-up path could result in insufficient fiscal buffers when faced with negative oil price shocks. Consequently, investment progress can be interrupted, driving up the capital depreciation rate, undermining economic stability, and lowering the growth benefits of public investment Bibliography Includes bibliographical references Notes English Description based on online resource; title from PDF title page (IMF, viewed Mar. 21, 2017) Subject Petroleum industry and trade -- Angola Capital investments -- Angola Capital investments Petroleum industry and trade Angola Form Electronic book Author Yackovlev, Irene, author. Yang, Shu-Chun Susan, 1971- author. ISBN 1484395816 9781484395813 1484313585 9781484313589 1484313577 9781484313572 ISSN 2227-8885

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