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Managing and harnessing volatile oil windfalls

Abstract:

Three funds are necessary to manage an oil windfall: intergenerational, liquidity and investment funds. The optimal liquidity fund is bigger if the windfall lasts longer and oil price volatility, prudence and the GDP share of oil rents are high and productivity growth is low. We apply our theory to the windfalls of Norway, Iraq and Ghana. The optimal size of Ghana's liquidity fund is tiny even with high prudence. Norway's liquidity fund is bigger than Ghana's. Iraq's liquidity fund is colossa...

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Publication status:
Published

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Publisher:
University of Oxford Publisher's website
Series:
OxCarre Papers
Publication date:
2012-05-23
Paper number:
85

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