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
Stock Status: On back-order

Languages and formats available



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.


Economic development , Economic policy , Fiscal policy , Investment

More publications in this series: Working Papers

More publications by: Reda Cherif ; Fuad Hasanov