Equilibrium Non-Oil Current Account Assessments for Oil Producing Countries

Author/Editor:

Alun H. Thomas ; Jun I Kim ; Aqib Aslam

Publication Date:

August 1, 2008

Electronic Access:

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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 introduces a methodology for assessing external balance in countries with large stocks of non-renewable resources based on oil stock data, and applies it to selected oil producing countries. The methodology uses a stock approach (instead of the more traditional flow approach) to estimate the equilibrium non-oil current account consistent with optimal consumption smoothing. One of the benefits of the stock approach is that geological data for oil reserves can be used to estimate oil wealth; however, the methodology makes the estimated non-oil current account norm very sensitive to oil price projections. Based on an oil price about US$70 per barrel prevailing in the summer of 2007, the baseline estimates indicate that the non-oil current accounts for most of the countries in the sample are broadly in equilibrium. By the same token, using oil price projections as of the summer of 2008 implies large disparities between the equilibrium non-oil current account position and the medium term forecast for all countries in the sample except for Malaysia.

Series:

Working Paper No. 08/198

Subject:

Frequency:

Monthly

English

Publication Date:

August 1, 2008

ISBN/ISSN:

9781451870565/1018-5941

Stock No:

WPIEA2008198

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

24

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