From Volatility to Stability in Expenditure: Stabilization Funds in Resource-Rich Countries
IMF Working Papers, March 12, 2014
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- From Volatility to Stability in Expenditure: Stabilization Funds in Resource-Rich Countries
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Bibliographic details
- Authors: Naotaka Sugawara
- Published: March 12, 2014
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781475515275.001
Summary and main finding
- Examines the effect of stabilization funds on the volatility of government expenditure in resource-rich countries.
- Uses a panel data set of 68 resource-rich countries over 1988–2012.
- The existence of stabilization funds contributes to smoothing government expenditure.
- Spending volatility in countries that have established such funds is found to be 13 percent lower in the main estimation.
- Similar impacts are found in robustness tests.
Methodology and scope
- Empirical analysis based on a panel dataset covering 68 resource-rich countries.
- Time period covered: 1988–2012.
- Main estimation and robustness checks used to assess the effect of stabilization funds on expenditure volatility.
Additional empirical findings and factors highlighted
- Political institutions and fiscal rules are significant factors in reducing expenditure volatility.
- The analysis highlights roles of:
- size of economy,
- diversified exports,
- real sector management,
- financial markets.
Subject classification and keywords
- Subject: Environment, Expenditure, Fiscal policy, Fiscal rules, Fiscal stance, Natural resources
- Keywords include: 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
From Volatility to Stability in Expenditure: Stabilization Funds in Resource-Rich Countries, IMF Working Paper No. 2014/043 (Naotaka Sugawara).