Optimal policies for managing oil revenue stabilization funds: An illustration using Saudi Arabia
Tarek N. Atalla,
Frederic Murphy and
Axel Pierru ()
Resources Policy, 2020, vol. 67, issue C
We develop an analytical approach that offers insights into how governments can better manage an oil-revenue stabilization fund. The model maximizes the expected intertemporal utility of households and consists of decisions that are a function of the fund level and oil revenue. We apply our approach to Saudi data, noting that the government deposits and reserve at the Saudi Arabian Monetary Agency have historically served as a buffer to decouple the Saudi government budget from oil revenue fluctuations. Results from our model match intuition: the larger the fund, the smaller the additions during periods of high revenues and the bigger the withdrawals during periods of low revenues. We also show that the fund can be partitioned into tranches with different asset durations rather than being solely invested in short-term assets. Our results indicate that the boundary between an oil-revenue stabilization fund and a sovereign wealth fund is not a bright line.
Keywords: Oil; Stabilization fund; Welfare; Regime switching; Sovereign wealth fund; Dynamic programming (search for similar items in EconPapers)
JEL-codes: C61 E21 Q43 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:67:y:2020:i:c:s0301420719304258
Access Statistics for this article
Resources Policy is currently edited by R. G. Eggert
More articles in Resources Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().