Natural-resource depletion, habit formation, and sustainable fiscal policy : lessons from Gabon /
While models based on Friedman's (1957) permanent-income hypothesis can provide oilproducing countries with long-run fiscal targets, they usually abstract from short-run costs associated with consolidation. This paper proposes a model that takes such adjustment costs (or "habits") int...
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| Online Access: |
Full text (MCPHS users only) |
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| Main Authors: | , |
| Format: | Electronic eBook |
| Language: | English |
| Published: |
[Washington, D.C.] :
International Monetary Fund,
2006
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| Series: | IMF working paper ;
WP/06/193. |
| Subjects: | |
| Local Note: | ProQuest Ebook Central |
| Summary: | While models based on Friedman's (1957) permanent-income hypothesis can provide oilproducing countries with long-run fiscal targets, they usually abstract from short-run costs associated with consolidation. This paper proposes a model that takes such adjustment costs (or "habits") into account. Further operational realism is added by permitting differential interest rates on sovereign debt and financial assets. The approach is applied to Gabon, where oil reserves are expected to be exhausted in 30 years. The results suggest that Gabon's current fiscal-policy stance cannot be maintained, while the presence of habits justifies smoothing the bulk of the adjustment toward the sustainable level over three to five years |
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| Physical Description: | 1 online resource (28 pages) |
| Format: | Master and use copy. Digital master created according to Benchmark for Faithful Digital Reproductions of Monographs and Serials, Version 1. Digital Library Federation, December 2002. |
| Bibliography: | Includes bibliographical references. |
| ISBN: | 1282392271 9781282392274 9781451991130 1451991134 |
| Reproduction Note: | Electronic reproduction. |
| Source of Description, Etc. Note: | Print version record. |
| Action Note: | digitized |
