IMF Working Papers

From Volatility to Stability in Expenditure: Stabilization Funds in Resource-Rich Countries

By Naotaka Sugawara

March 12, 2014

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Naotaka Sugawara. From Volatility to Stability in Expenditure: Stabilization Funds in Resource-Rich Countries, (USA: International Monetary Fund, 2014) accessed December 21, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper examines the effect of stabilization funds on the volatility of government expenditure in resource-rich countries. Using a panel data set of 68 resource-rich countries over 1988–2012, the results find that the existence of stabilization funds contributes to smoothing government expenditure. The spending volatility in countries that have established such funds is found to be 13 percent lower in the main estimation, and similar impacts are found in robustness tests. The analysis also shows that political institutions and fiscal rules are significant factors in reducing the expenditure volatility, while highlighting the roles of the size of economy, diversified exports, real sector management, and financial markets.

Subject: Environment, Expenditure, Fiscal policy, Fiscal rules, Fiscal stance, Natural resources

Keywords: Base year, Consumption expenditure, Discretionary government expenditure, Expenditure volatility, Expenditure volatility in country, Fiscal policy, Fiscal rules, Fiscal stance, Fiscal volatility, Government consumption expenditure, Government expenditure, Government structure, Institution, Middle East and Central Asia, Natural resources, Smoothing government expenditure, Spending mechanism, Stabilization fund, Stabilization fund dummy, Standard deviation, Volatility of government expenditure, WP

Publication Details

  • Pages:

    49

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2014/043

  • Stock No:

    WPIEA2014043

  • ISBN:

    9781475515275

  • ISSN:

    1018-5941

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