Browse

You are looking at 1 - 10 of 11 items for :

  • Papua New Guinea x
Clear All
JEFFREY FRANKEL and SHANG-JIN WEI

This paper offers a new approach to estimate countries’ de facto exchange rate regimes, a synthesis of two techniques. One is a technique that the authors have used in the past to estimate implicit de facto weights when the hypothesis is a basket peg with little flexibility. The second is a technique used by others to estimate the de facto degree of exchange rate flexibility when the hypothesis is an anchor to the dollar or some other single major currency, but with a possibly substantial degree of flexibility around that anchor. Because many currencies today follow variants of band-basket-crawl, it is important to have available a technique that can cover both dimensions, inferring weights and flexibility. We try out the technique on some 20 currencies over the period 1980–2007. Most are currencies that have officially used baskets as anchors for at least part of this sample period. But a few are known floaters or known simple peggers. In general, the synthesis technique seems to work as it should. IMF Staff Papers (2008) 55, 384–416. doi:10.1057/imfsp.2008.18; published online 1 July 2008

Mr. Rolando Ossowski, Mr. Steven A Barnett, Mr. James Daniel, and Mr. Jeffrey M. Davis

Abstract

A country with large exhaustible resources such as oil can benefit substantially from them, but the revenues from exploiting these resources can pose challenges. Fiscal policymakers need to decide how expenditure can be planned and insulated from revenue shocks arising from the volatility and unpredictability of resource prices. Decisions also need to be made on the extent to which resources should be saved for future generations.

Mr. Rolando Ossowski, Mr. Steven A Barnett, Mr. James Daniel, and Mr. Jeffrey M. Davis

Abstract

A country with large fiscal revenues derived from exploiting a nonrenewable resource such as oil typically faces two main problems—that the revenue stream is uncertain and volatile, and that it will eventually dry up. NRFs are sometimes proposed to deal with both these problems. First, a fund may be seen as able to stabilize budgetary revenues. When the resource price is “high,” the fund would receive resources, which it would then pay out to the budget when the price is “low.” Second, a fund may be seen as a way to save some of the revenue generated by exploiting the finite stock of the resource, which can then provide income after it has been exhausted. Funds may also be set up for other reasons: to counteract real exchange rate volatility and “Dutch disease,”2 for liquidity and political economy purposes, and to enhance governance and transparency.

Mr. Rolando Ossowski, Mr. Steven A Barnett, Mr. James Daniel, and Mr. Jeffrey M. Davis

Abstract

Some countries have considered, or turned to, the use of NRFs to address some of the issues discussed above, such as the short-run stabilization and long-run saving challenges posed by nonrenewable resource revenues. The general characteristic of such funds is that they are public sector institutions, separate from the budget, that receive inflows related to the exploitation of a nonrenewable resource.Table 3.1 summarizes the main objectives and design features of selected funds.

Ms. Elva Bova, Mr. Paulo A Medas, and Mr. Tigran Poghosyan
Resource-rich countries face large and persistent shocks, especially coming from volatile commodity prices. Given the severity of the shocks, it would be expected that these countries adopt countercyclical fiscal policies to help shield the domestic economy. Taking advantage of a new dataset covering 48 non-renewable commodity exporters for the period 1970-2014, we investigate whether fiscal policy does indeed play a stabilizing role. Our analysis shows that fiscal policy tends to have a procyclical bias (mainly via expenditures) and, contrary to others, we do not find evidence that this bias has declined in recent years. Adoption of fiscal rules does not seem to reduce procyclicality in a significant way, but the quality of political institutions does matter. Finally, non-commodity revenues tend to respond only to persistent changes in commodity prices.
Mr. Chris Papageorgiou, Christian Henn, and Theo S. Eicher
Trade theories covering Preferential Trade Agreements (PTAs) are as diverse as the literature in search of their empirical support. To account for the model uncertainty that surrounds the validity of the competing PTA theories, we introduce Bayesian Model Averaging (BMA) to the PTA literature. BMA minimizes the sum of Type I and Type II error, the mean squared error, and generates predictive distributions with optimal predictive performance. Once model uncertainty is addressed as part of the empirical strategy, we report clear evidence of Trade Creation, Trade Diversion, and Open Bloc effects. After controlling for natural trading partner effects, Trade Creation is weaker - except for the EU. To calculate the actual effects of PTAs on trade flows we show that the analysis must be comprehensive: it must control for Trade Creation and Diversion as well as all possible PTAs. Several prominent control variables are also shown to be robustly related to Trade Creation; they relate to factor endowments and economic policy.
Mr. Rolando Ossowski, Mr. Steven A Barnett, Mr. James Daniel, and Mr. Jeffrey M. Davis

Abstract

The establishment of an NRF requires decisions about its integration within the fiscal framework and its asset-management strategy. Governance, transparency, and accountability issues also need to be addressed.

International Monetary Fund
This paper provides deeper insights on a few themes with regard to the experience with macroeconomic management in resource-rich developing countries (RRDCs). First, some stylized facts on the performance of these economies relative to their non-resource peers are provided. Second, the experience of Fund engagement in these economies with respect to surveillance, programs, and technical assistance is assessed. Third, the experience of selected countries with good practices in the management of the natural resource wealth is presented. Fourth, the experience of IMF advice in helping RRDCs set up resource funds is discussed. Finally, the main themes and messages from the IMF staff consultation with external stakeholders (CSOs, policy makers, academics) are presented.
Mr. Rolando Ossowski, Mr. Steven A Barnett, Mr. James Daniel, and Mr. Jeffrey M. Davis

Abstract

This chapter examines whether funds can help countries pursue good macroeconomic, and especially fiscal policies, and consequent design issues. Nonrenewable resource funds (NRF) have been suggested as a way of dealing with the effects of price variability, making it easier to put revenues aside when prices are high so that they can be made available to maintain expenditures when prices are low. Funds may also serve as mechanisms to allow part of the nonrenewable resource wealth to be shared by future generations. A detailed evaluation of country experience suggests that NRFs have been associated with a variety of operating rules and fiscal policy experience. In several cases, rules have been bypassed or changed and they do not themselves seem to have effectively constrained spending, and the integration of the fund's operations with overall fiscal policy has often proven problematic. Whether the political economy arguments for an NRF outweigh the potential disadvantages will need to be considered based on the situation in each country.

Mr. Rolando Ossowski, Mr. Steven A Barnett, Mr. James Daniel, and Mr. Jeffrey M. Davis

Abstract

This section provides an evaluation of the effectiveness of NRFs in two ways. First, it considers the effect of NRFs on government expenditure and its relationship to resource export receipts. The empirical evidence draws on econometric estimates, using data for a number of countries with NRFs.18 Second, it provides a review of selected country experience with NRFs to assess whether, and in what way, the rules of the NRF may have constrained government behavior.