Fiscal vulnerability and sustainability in oil producing sub saharan african countries york robert c zhan zaijin. Improving Surveillance Across the CEMAC Region by Iossifov Plamen, Takebe Misa, Zhan Zaijin, Kinoshita Noriaki, and York Robert C. 2019-01-30

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IMF Working Papers

fiscal vulnerability and sustainability in oil producing sub saharan african countries york robert c zhan zaijin

As elaborated above, such investments can raise the return on investment, spur non-oil growth, and change the key parameters used to drive the results in all three models. By contrast, for the public sector and African countries permanent income has little or no effect. In addition, they are more efficient at calculating risk and making choices according to their future healthcare needs. Finally, foreign aid is progressively absorbed over time through net imports, and is associated with a more depreciated real exchange rate in the long-run. These involve important elements of judgment and heavily influence policy decisions; the return on investment and subsequent growth in the non-oil sector is a case in point.

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Improving Surveillance Across the CEMAC Region by Iossifov Plamen, Takebe Misa, Zhan Zaijin, Kinoshita Noriaki, and York Robert C.

fiscal vulnerability and sustainability in oil producing sub saharan african countries york robert c zhan zaijin

To emphasize the important characteristics of oil-producing countries we make several modifications to the work of Lee and others 2008. The central argument is that development practice will benefit from a bottom-up, decentralized approach to budgeting and fiscal policy management, involving national, sub-national, and civil society institutions. The recent spectacular rise and equally spectacular fall in prices provides an opportunity to inquire whether anything is different this time. Because we are interested in gauging their fiscal vulnerability and sustainability from the angle of managing exhaustible oil wea. From the impact of Bioenergy crop adoption and Drought Index Insurance to Agro-Industrialization, this volume is important reading for individual researchers, academic associations and professional bodies interested in African agricultural development.

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Fiscal vulnerability and sustainability in oil

fiscal vulnerability and sustainability in oil producing sub saharan african countries york robert c zhan zaijin

As expected, less appetite for risk leads to higher precautionary saving but the consumption-smoothing component remains constant. However, do such people spend more on healthcare? This paper offers a coherent empirical analysis of the determinants of the real exchange rate, the current account, and the net foreign assets position in low income countries. Hence, the regression describes how national consumption the non-oil current account is affected by current and permanent oil-related explanatory variables oil balance and the return on oil wealth. The representative agent solves a selfinsurance problem, in which it can accumulate foreign assets to diversify itself away from the volatile exhaustible oil resource. The results reveal that factors that matter in determining the equilibrium current account balance of oil-exporting counties are fiscal balance, oil balance, oil wealth, age dependency, economic growth, and degree of oil production-related imports.

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Improving Surveillance Across the CEMAC Region by Iossifov Plamen, Takebe Misa, Zhan Zaijin, Kinoshita Noriaki, and York Robert C.

fiscal vulnerability and sustainability in oil producing sub saharan african countries york robert c zhan zaijin

York and Zhan 2009 show how the empirical results in this type of sustainability analysis can change significantly if gas reserves are included, because they can extend the life of production and increase the accumulation of wealth over time. Robustness of the Results In this section we assess the robustness of the empirical estimates of the optimal current account balance and the sensitivity to different model parameters and assumptions. Along the same lines, if the returns from exploitation investment or non-oil cash flow increase, consumption should also be brought forward in time. The real exchange rate, the business cycle and the terms of trade are also shown to have short-run effects on the current account, while the stage of development and demographics have longer-run effects. Many related empirical studies Morsy, 2009; Bems and Filho, 2009; Arezki and Hasanov, 2009; Takebe and York, 2011; Beidas-Strom and Cashin, 2011; Egwaikhide, 1997; Egwaikhide et al.

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Improving Surveillance Across the CEMAC Region by Iossifov Plamen, Takebe Misa, Zhan Zaijin, Kinoshita Noriaki, and York Robert C.

fiscal vulnerability and sustainability in oil producing sub saharan african countries york robert c zhan zaijin

In the panel regression, the non-oil fiscal balance is calculated as deviations from the average of those of the euro area and the United States, as a proxy for oil-producers' trading partners for which complete data is not available. The key underlying assumptions and data sample used in our analysis are presented in Box 1. Barajas, Adolfo; Chami, Ralph; Fullenkamp, Connel; Gapen, Michael T. The recent spectacular rise and equally spectacular fall in prices provides an opportunity to inquire whether anything is different this time. This result complements the fiscal sustainability analysis, for example, elaborated in York and Zhan 2009. As Lee and others 2008 note the impact of the demographic profile on the current account could be different among countries, depending on the characteristics of the retirement system and the development of financial markets.

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Back Matter : Regional Economic Outlook, October 2015 : Sub

fiscal vulnerability and sustainability in oil producing sub saharan african countries york robert c zhan zaijin

This study empirically investigates the link between fiscal policy and the current account in Nigeria. While the deterministic case has a closed form solution, the stochastic case does not and needs to be solved numerically. However, we chose to present the two models separately. Chapter 3 looks at the implications for the region of persistently high income and gender inequality and ways to reduce them. All major commodity categories were affected, with the notable exception of cocoa beans.

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Fiscal vulnerability and sustainability in oil

fiscal vulnerability and sustainability in oil producing sub saharan african countries york robert c zhan zaijin

For both high- and low-oil dependent countries, precautionary saving declines over time alongside the reduction in oil production. Unconventional Monetary Policy in the United Kingdom Meier, André No. We find that the impact of oil price on the current balance is only significant in the short run. In particular, none of the three approaches explicitly recognizes the potential growth of the non-oil sector. To determine the normal current account level shown in Table 6 and Figure 3 above, we focus on the pooled results shown in column 1 of Table 7a, which has the best fit in terms of R-squared. Data sample: The consumption-smoothing and the precautionary saving models were calibrated on data from 2005. What explains this oil curse? The methodology for estimating the return on wealth is outlined in the section above on consumption smoothing, although we further modify this calculation by correcting for population growth and netting out domestic consumption, as proposed by Thomas and Bayoumi 2009.

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Read External Sustainability of Oil

fiscal vulnerability and sustainability in oil producing sub saharan african countries york robert c zhan zaijin

Commodity export prices fell in all ten case study countries beginning in 2012. This creates distortions that drive a wedge between it and the private sector. Ross traces the oil curse to the upheaval of the 1970s, when oil prices soared and governments across the developing world seized control of their countries' oil industries. This site is like a library, you could find million book here by using search box in the widget. The methodology uses a stock approach instead of the more traditional flow approach to estimate the equilibrium non-oil current account consistent with optimal consumption smoothing. The responses of the macroeconomic policymakers in Africa to the Euro crisis and to the recent globalization trends are reviewed and analyzed. A similar result is obtained in the second regression, although the coefficient on the current oil balance is slightly higher.

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NEP

fiscal vulnerability and sustainability in oil producing sub saharan african countries york robert c zhan zaijin

The analysis is based on a structural approach that highlights the roles of the fundamental macroeconomic determinants of saving and investment. The savings and investment decisions of the private-sector participants can accentuate the difference between fiscal and external sustainability. Oppers, Richard Hughes, James McHugh et Warren L. Our research strategy is to apply these models to the eight countries in the subregion--Angola, Cameroon, Chad, Côte d'Ivoire, Equatorial Guinea, Gabon, Nigeria, and the Republic of Congo--using similar simplifying assumptions so that we are using the same lens to view how they do and do not differ. The non-oil fiscal balance is also included as an oil-related explanatory variable in this analysis because it reflects the public sector's response to current and permanent oil income.

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Download [PDF] Sustainability In Sub Saharan Africa Free Online

fiscal vulnerability and sustainability in oil producing sub saharan african countries york robert c zhan zaijin

In the 1970s, many African governments ramped up investment spending, borrowed heavily on the anticipation of continuing high prices, and increased current expenditures in ways that were difficult to reverse, which helped to generate the debt crises of the 1980s. A similar finding was also reported in Takebe and York 2011 when investigating the external sustainability of oil-producing sub-Saharan African countries. Under this framework, countries consume the return on oil- and non-oil wealth with a correction for consumption tilting. The negative sign on the lagged non-oil current account balance suggests that the non-oil current account balance does not demonstrate persistence. Overall a need for legal and regulatory reform, along with the institution of government loan guarantees could help develop and improve the options for a commercially viable aquaculture business. Commodity price volatility can drive booms and busts in economic activity.

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