IMF Working Papers Volume 2014 Issue 043: From Volatility to Stability in Expenditure: Stabilization Funds in Resource-Rich Countries (2014)

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From Volatility to Stability in Expenditure: Stabilization Funds in Resource-Rich Countries

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Naotaka Sugawara

Naotaka Sugawara
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Series:: IMF Working Papers

Volume/Issue:: Volume 2014: Issue 043

Publication Date:: 12 Mar 2014

DOI:: https://doi.org/10.5089/9781475515275.001

ISBN:: 9781475515275

ISSN:: 1018-5941

Pages:: 49

Keywords:: WP; government expenditure; expenditure volatility; stabilization fund dummy; base year; stabilization fund; fiscal volatility; fiscal policy; institution; standard deviation; smoothing government expenditure; discretionary government expenditure; spending mechanism; government structure; expenditure volatility in country; government consumption expenditure; consumption expenditure; volatility of government expenditure; Fiscal rules; Natural resources; Fiscal stance; Middle East and Central Asia

Legal-disclaimer:: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Series:: IMF Working Papers

Volume/Issue:: Volume 2014: Issue 043

Language:: English

Publication Date:: 12 Mar 2014

DOI:: https://doi.org/10.5089/9781475515275.001

ISBN:: 9781475515275

ISSN:: 1018-5941

Pages:: 49

Keywords:: WP; government expenditure; expenditure volatility; stabilization fund dummy; base year; stabilization fund; fiscal volatility; fiscal policy; institution; standard deviation; smoothing government expenditure; discretionary government expenditure; spending mechanism; government structure; expenditure volatility in country; government consumption expenditure; consumption expenditure; volatility of government expenditure; Fiscal rules; Natural resources; Fiscal stance; Middle East and Central Asia

Legal-disclaimer:: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

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This paper examines the effect of stabilization funds on the volatility of government expenditure in resource-rich countries. Using a panel data set of 68 resource-rich countries over 1988–2012, the results find that the existence of stabilization funds contributes to smoothing government expenditure. The spending volatility in countries that have established such funds is found to be 13 percent lower in the main estimation, and similar impacts are found in robustness tests. The analysis also shows that political institutions and fiscal rules are significant factors in reducing the expenditure volatility, while highlighting the roles of the size of economy, diversified exports, real sector management, and financial markets.

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IMF Working Papers

ISSN:: 1018-5941

Publisher:: International Monetary Fund

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