Do Sovereign Wealth Funds Dampen the Negative Effects of Commodity Price Volatility?

Kamiar Mohaddes and Mehdi Raissi

No 304, Globalization Institute Working Papers from Federal Reserve Bank of Dallas

Abstract: This paper studies the impact of commodity terms of trade (CToT) volatility on economic growth (and its sources) in a sample of 69 commodity-dependent countries, and assesses the role of Sovereign Wealth Funds (SWFs) and quality of institutions in their long-term growth performance. Using annual data over the period 1981-2014, we employ the Cross-Sectionally augmented Autoregressive Distributive Lag (CS-ARDL) methodology for estimation to account for cross-country heterogeneity, cross-sectional dependence, and feedback effects. We find that while CToT volatility exerts a negative impact on economic growth (operating through lower accumulation of physical capital and lower TFP), the average impact is dampened if a country has a SWF and better institutional quality (hence a more stable government expenditure).

JEL-codes: C23 E32 F43 O13 O40 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2017-02-01
New Economics Papers: this item is included in nep-agr and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (37)

Downloads: (external link)
https://www.dallasfed.org/institute/~/media/docume ... papers/2017/0304.pdf Full text (application/pdf)

Related works:
Journal Article: Do sovereign wealth funds dampen the negative effects of commodity price volatility? (2017)
Working Paper: Do Sovereign Wealth Funds Dampen the Negative Effects of Commodity Price Volatility? (2017)
Working Paper: Do sovereign wealth funds dampen the negative effects of commodity price volatility? (2017)
Working Paper: Do Sovereign Wealth Funds Dampen the Negative Effects of Commodity Price Volatility? (2000)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:feddgw:304

DOI: 10.24149/gwp304

Access Statistics for this paper

More papers in Globalization Institute Working Papers from Federal Reserve Bank of Dallas Contact information at EDIRC.
Bibliographic data for series maintained by Amy Chapman ().