Oil Exporters' Dilemma: How Much to Save and How Much to Invest

WPIEA2012004 Image
Price:  $18.00

Author/Editor: Reda Cherif, Fuad Hasanov
Release Date: © January, 2012
ISBN : 978-1-47550-245-9
Stock #: WPIEA2012004
English
Stock Status: On back-order

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Description

Policymakers in oil-exporting countries confront the question of how to allocate oil revenues among consumption, saving, and investment in the face of high income volatility. We study this allocation problem in a precautionary saving and investment model under uncertainty. Consistent with data in the 2000s, precautionary saving is sizable and the marginal propensity to consume out of permanent shocks is below one, in stark contrast to the predictions of the perfect foresight model. The optimal investment rate is high if productivity in the tradable sector is high enough.

Taxonomy

Economic development , Economic policy , Fiscal policy , Investment




More publications in this series: Working Papers


More publications by: Reda Cherif ; Fuad Hasanov