Harnessing windfall revenues: optimal policies for resource-rich developing countries

Working paper

A windfall of natural resource revenue (or foreign aid) faces government with choices of how to manage public debt, investment, and the distribution of funds for consumption, particularly if the windfall is both anticipated and temporary. Standard policy advice follows the permanent income hypothesis in suggesting a sustained in increase in consumption supported by interest on accumulated foreign assets (a Sovereign Wealth Fund) once resource revenues are exhausted. However, this strategy is ...

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Authors: Venables, A; Van der Ploeg, R

• Publication status: Published
• Publisher: University of Oxford Publisher's website
• Series: OxCarre Papers
• Publication date: 2008-09-30
• Paper number: 9
• Keywords: debt management; developing economies; credit constraints; windfall public revenues; asset holding subsidy; natural resource; private investment; optimal fiscal policy; public infrastructure; sovereign wealth fund; risk premium on foreign debt