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Prepared by Chris Geiregat.
And the stock of productive physical assets. The issue if spending on investment goods is largely ignored in this paper to simplify the discussion.
One way to understand this loss is as follows. Suppose that one could auction off all future oil revenues (plus the initial balance in the FGF) for one payment. An investor, using a discount rate of 3.29 percent, would offer CFAF 4,458.1 billion. However, if the contract required that investor to invest part of those future revenues in interest-bearing assets that yield only 1.7 percent, then she would offer only CFAF 3,766.4 billion. The difference is a net loss to the country.
Indeed, the per capita annuity is very sensitive to changes in the population growth rate. The per capita annuity will lie between one of two extremes. First, if g = r then no interest may be paid out, and second, if g = 0 then each period all permanent income is made available.
Of course, the first scenario yields the same numbers, as nothing is saved anyway. Thus we can limit our discussion to a comparison of the second and third scenarios.