Economic Principles for Resource Revenue Management

Author:Anthony J. Venables - Samuel Wills
Position:Oxford Centre for the Analysis of Resource Rich Economics, Department of Economics, University of Oxford
Pages:4-7
SUMMARY

This article explores strategies for managing revenue from natural resources, focusing on the balance between domestic and foreign asset accumulation. It suggests that domestic asset accumulation is the priority, while there are three motives for accumulating foreign assets: inter-generational transfer, parking funds, and stabilization. The paper argues that the first of these is inappropriate... (see full summary)

 
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Volume 16, Number 3 September 2015
www.imf.org/researchbulletin
B U L L E T I N
1
Economic Principles for Resource
Revenue Management
Anthony J. Venables and Samuel Wills1
This article ex plores strategies for managing
revenue from natural resources, foc using on
the balance between dome stic and foreign asset
accumulation. It sugge sts that domestic asset
accumulation is the pri ority, while there are
three motives for accumulating foreign a ssets:
inter-generational transfer, parking fund s, and stabilization. The paper argues
that the first of these is inap propriate for low income countries. The second i s
required if it is difficult to a bsorb extra spending in the domestic economy and
takes time to build up domes tic investment. The third is important, and depend s
on the extent to which the economy has othe r ways of adjusting to shocks.
The recent commodity super-cycle saw oil price s rise from below US$30 per
barrel in 2003 to over US$100 per barrel in 2011, before falling to US$50 per
Lower for Longer: Neutral Rates in
the United States
Andrea Pescatori and Jarkko Turunen
We use a semi-structural model to estim ate
neutral rates in the United States. Our Bayesian
estimation incorporates pr ior information on
the output gap and potential output (ba sed on
a production function approa ch) and accounts
for unconventional monetary polici es by using
estimates of “shadow” polic y rates. Our results show a signif icant trend decline
in the neutral real rate over time. Estimated ne utral rates turned negative
during the global financ ial crisis and are projec ted to increase gradually going
forward. The results sup port the use of unconventional monetary policies to
provide extraordinary ac commodation during the crisis period and a g radual
normalization in policy lo oking forward. The decline in neutral rates is driven only
in part by lower potential g rowth since other factors, su ch as excess global savings
and higher risk aversion , have also contributed to the decline.
In This Issue
1 Lower for Longer: Neutral
Rates in the United States
1 Economic Principles
for Resource Revenue
Management
6 Q&A: Seven Questions on
Financing for
Development
11 Annual Research
Conference
12 IMF Working Papers
16 IMF Economic Review
17 Recommended Readings
from IMF Publications
18 Staff Discussion Notes
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Research Summaries
1 Anthony J. Venables and Samuel Wil ls are both at the Oxford C entre for the Analysis of
Resource Rich E conomics, Department of Ec onomics, University of Oxford.

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