Managing (Fiscally) Resource Windfalls : Exploring Policy Options for the Democratic Republic of Congo

How should resource-dependent countries respond (fiscally) to resource price volatility? This note studies what determines revenue allocation between a "spend today" strategy and a "save now-spend tomorrow" approach in the conte...

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Main Author:	Pinto-Moreira, Emmanuel
Format:	Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2016
Subjects:	commodity prices price shocks sovereign wealth fund DSGE model
Online Access:	http://documents.worldbank.org/curated/en/2016/09/26819003/economic-premise--managing-fiscally-resource-windfalls-exploring-policy-options-democratic-republic-congo-economic-premise-managing-fiscally-resource-windfalls-exploring-policy-options-democratic-republic-congo http://hdl.handle.net/10986/25153

id	okr-10986-25153
recordtype	oai_dc
spelling	okr-10986-251532021-06-14T10:17:41Z Managing (Fiscally) Resource Windfalls : Exploring Policy Options for the Democratic Republic of Congo Pinto-Moreira, Emmanuel commodity prices price shocks sovereign wealth fund DSGE model How should resource-dependent countries respond (fiscally) to resource price volatility? This note studies what determines revenue allocation between a "spend today" strategy and a "save now-spend tomorrow" approach in the context of the Democratic Republic of Congo. It uses a three-sector model in which public infrastructure investment has tangible benefits for private production and investment while also being subject to absorption constraints. The optimal allocation rule between spending today and asset accumulation is calibrated by minimizing a social loss function defined in terms of household welfare (measured by consumption volatility) and macroeconomic volatility (measured in terms of fiscal volatility only, or a composite measure involving real exchange rate volatility). The results indicate that, if properly managed, a sovereign fund could contribute significantly to macroeconomic stability in the Democratic Republic of Congo. 2016-10-13T20:05:23Z 2016-10-13T20:05:23Z 2016-09 Working Paper http://documents.worldbank.org/curated/en/2016/09/26819003/economic-premise--managing-fiscally-resource-windfalls-exploring-policy-options-democratic-republic-congo-economic-premise-managing-fiscally-resource-windfalls-exploring-policy-options-democratic-republic-congo http://hdl.handle.net/10986/25153 English en_US Policy Research Working Paper;No. 7837 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Africa Congo, Democratic Republic of
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	commodity prices price shocks sovereign wealth fund DSGE model
spellingShingle	commodity prices price shocks sovereign wealth fund DSGE model Pinto-Moreira, Emmanuel Managing (Fiscally) Resource Windfalls : Exploring Policy Options for the Democratic Republic of Congo
geographic_facet	Africa Congo, Democratic Republic of
relation	Policy Research Working Paper;No. 7837
description	How should resource-dependent countries respond (fiscally) to resource price volatility? This note studies what determines revenue allocation between a "spend today" strategy and a "save now-spend tomorrow" approach in the context of the Democratic Republic of Congo. It uses a three-sector model in which public infrastructure investment has tangible benefits for private production and investment while also being subject to absorption constraints. The optimal allocation rule between spending today and asset accumulation is calibrated by minimizing a social loss function defined in terms of household welfare (measured by consumption volatility) and macroeconomic volatility (measured in terms of fiscal volatility only, or a composite measure involving real exchange rate volatility). The results indicate that, if properly managed, a sovereign fund could contribute significantly to macroeconomic stability in the Democratic Republic of Congo.
format	Working Paper
author	Pinto-Moreira, Emmanuel
author_facet	Pinto-Moreira, Emmanuel
author_sort	Pinto-Moreira, Emmanuel
title	Managing (Fiscally) Resource Windfalls : Exploring Policy Options for the Democratic Republic of Congo
title_short	Managing (Fiscally) Resource Windfalls : Exploring Policy Options for the Democratic Republic of Congo
title_full	Managing (Fiscally) Resource Windfalls : Exploring Policy Options for the Democratic Republic of Congo
title_fullStr	Managing (Fiscally) Resource Windfalls : Exploring Policy Options for the Democratic Republic of Congo
title_full_unstemmed	Managing (Fiscally) Resource Windfalls : Exploring Policy Options for the Democratic Republic of Congo
title_sort	managing (fiscally) resource windfalls : exploring policy options for the democratic republic of congo
publisher	World Bank, Washington, DC
publishDate	2016
url	http://documents.worldbank.org/curated/en/2016/09/26819003/economic-premise--managing-fiscally-resource-windfalls-exploring-policy-options-democratic-republic-congo-economic-premise-managing-fiscally-resource-windfalls-exploring-policy-options-democratic-republic-congo http://hdl.handle.net/10986/25153
_version_	1764458686027137024

Managing (Fiscally) Resource Windfalls : Exploring Policy Options for the Democratic Republic of Congo

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