Skip to main content Accessibility help

We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.

Close cookie message
×
Hostname: page-component-78c5997874-t5tsf Total loading time: 0 Render date: 2024-11-01T03:13:45.163Z Has data issue: false hasContentIssue false

8 - Fiscal Institutions in Resource-rich Economies

Lessons from Chile and Norway*

Published online by Cambridge University Press:  05 July 2016

Ibrahim Elbadawi  and
Hoda Selim
By
Klaus Schmidt-Hebbel
Ibrahim Elbadawi
Affiliation:
Dubai Economic Council and Economic Research Forum (ERF), Egypt
Hoda Selim
Affiliation:
Economic Research Forum (ERF), Egypt
Get access

Summary

Abstract

Resource-rich economies in general, and Arab oil exporters in particular, are at a critical juncture, facing the challenge of revamping their fiscal policy institutions and conduct to strengthen macroeconomic and financial stability, raise growth, and improve intra/inter-generational equity. This paper starts by reviewing the international evidence on fiscal policies and outcomes in resource-rich economies at large and Arab oil-exporting countries in particular, which suggests that strong fiscal (and political) institutions can turn the resource curse into a blessing. Then the paper provides comparative reviews of Chile’s and Norway’s decade-long experience in setting up new fiscal institutions and rules to manage their resource rents, aiming at and, in fact, attaining more macroeconomic and financial stability, higher growth and improved equity. Specific reform lessons to strengthen fiscal institutions and policies are drawn for resource-rich economies and Arab oil exporters.

Type
Chapter
Information
Understanding and Avoiding the Oil Curse in Resource-rich Arab Economies , pp. 225 - 283
Publisher: Cambridge University Press
Print publication year: 2016

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Abdih, Y., López-Murphy, P., Roitman, A., and Sahay, R., (2010). The Cyclicality of Fiscal Policy in the Middle East and Central Asia: Is the Current Crisis Different? IMF Working Paper No. 10/68, March.Google Scholar
Advisory Committee on Fiscal Policy (Comité Asesor para el Diseño de una Política Fiscal de Balance Estructural de Segunda Generación para Chile), (2010). Propuesta para Perfeccional la Regla Fiscal (Informe Preliminar), manuscript, Ministry of Finance of Chile.Google Scholar
Advisory Committee on Fiscal Policy (Comité Asesor para el Diseño de una Política Fiscal de Balance Estructural de Segunda Generación para Chile), (2011). Propuesta para Perfeccional la Regla Fiscal (Informe Final), manuscript, Ministry of Finance of Chile.Google Scholar
Advisory Committee for Trend GDP (Comité Consultivo del PIB Tendencial, agosto de 2011), (2011). Acta Comité Consultivo PIB Tendencial, manuscript, Ministry of Finance of Chile.Google Scholar
Advisory Committee for the Reference Copper Price (Acta del Comité Consultivo del Precio de Referencia del Cobre, agosto de 2011), (2011). Acta Comité Consultivo del Precio de Referencia del Cobre, manuscript, Ministry of Finance of Chile.Google Scholar
Advisory Committee for Sovereign Funds (Comité Asesor del Ministerio de Hacienda para los Fondos de Responsabilidad Fiscal), (2010). Informe Anual Comité Financiero, manuscript, Ministry of Finance of Chile.Google Scholar
Alesina, A., Ardagna, S., Perotti, R. and Schiantarelli, F., (1999). Fiscal Policy, Profits, and Investment. NBER Working Papers, No. 7207.Google Scholar
Alesina, A and Perotti, R., (1996). Budget Deficits and Budget Institutions. NBER Working Papers, No. 5556.Google Scholar
Al Iriani, M., (2012). Oil Curse in Yemen: The Role of Institutions and Policies. ERF Working Paper 694.Google Scholar
Al-Sheikh, H. and Erbas, S.N., this volume. Oil Curse and Labor Markets: The Case of Saudi Arabia.Google Scholar
Bhattacharyya, S. and Collier, P., (2011). Public Capital in Resource Rich Economies. CSAE manuscript, August.Google Scholar
Bornhorst, F., Gupta, S., and Thornton, J., (2008). Natural Resource Endowments, Governance, and the Domestic Revenue Effort: Evidence from a Panel of Countries. IMF Working Paper No. 08/170, July.Google Scholar
Cáceres, C., Corbacho, A., and Medina, L., (2010). Structural Breaks in Fiscal Performance: Did Fiscal Responsibility Laws have Anything to Do with Them? IMF Working Paper No. 10/248.Google Scholar
Calderón, C. and Schmidt-Hebbel, K., (2008). The Choice of Fiscal Regimes in the World. Central Bank of Chile Working Paper No. 487.Google Scholar
Calderón, C., Duncan, R. and Schmidt-Hebbel, K., (2016). Do Good Institutions Promote Countercyclical Macroeconomic Policies? Oxford Bulletin of Economics and Statistics, forthcoming.CrossRefGoogle Scholar
Calmfors, L. and Wren-Lewis, S., (2011). What Should Fiscal Council Do? Discussion Paper Series, University of Oxford Department of Economics.CrossRefGoogle Scholar
Debrun, X., Hauner, D. and Kumar, M., (2009). Independent Fiscal Agencies. Journal of Economic Surveys 23(1).Google Scholar
Debrun, X. and Kumar, M. S., (2007). The Discipline-Enhancing Role of Fiscal Institutions: Theory and Empirical Evidence. IMF Working Papers No. 171.Google Scholar
Eijffinger, S., Geraats, P., and van der Cruijsen, C., (2006). Does Central Bank Transparency Reduce Interest Rates? DNB Working Papers 085.Google Scholar
Elbadawi, I., Schmidt-Hebbel, K., and Soto, R., (2015). Why do Countries have Fiscal Rules?, In Caballero, R. and Schmidt-Hebbel, K. (editors): Economic Policy in Emerging-Market Economies: Festschrift in Honor of Vittorio Corbo. Central Bank of Chile. Santiago, Chile.Google Scholar
Elbadawi, I.A. and Soto, R.. This Volume. Resource Rents, Political Institutions and Economic Growth.Google Scholar
Engel, E., Marcel, M. and Meller, P., (2007). Meta Superávit Estructural: Elementos para su Análisis. Manuscript, Ministry of Finance of Chile.Google Scholar
Fasano, U. and Wang, Q., (2002). Testing the Relationship between Government Spending and Revenue: Evidence from GCC Countries. IMF Working Paper No. 02/201, November.Google Scholar
Fiess, N., (2004). Chile’s Fiscal Rule. Econometric Society 2004 Latin American Meetings 348, Econometric Society.Google Scholar
Frankel, J. (2011). A Solution to Fiscal Procyclicality: The Structural Budget Institutions Pioneered by Chile. Working Paper N°604, Banco Central de Chile, Santiago, Chile.Google Scholar
García, S., (2011). Regla Fiscal Contracíclica, Análisis para Chile.Tesis de Magister en Economía, Universidad de Chile.Google Scholar
Gelb, A., (2012). Economic Diversification and the Role of Government in Resource Rich Economies. Presented at the ERF Conference on “Understanding and Avoiding the Resource Curse in the Arab World”, Kuwait, January 15–16.Google Scholar
Geraats, P., (2008). ECB Credibility and Transparency, European Economy - Economic Papers, 330.Google Scholar
Gylfason, T., (2012). International Experiences with the Management of Natural Resources. Presented at the ERF Conference on “Understanding and Avoiding the Resource Curse in the Arab World”, Kuwait, January 15–16.Google Scholar
International Monetary Fund, (2010). Navigating the Fiscal Challenges Ahead. World Economic and Financial Surveys. Washington, DC.Google Scholar
International Monetary Fund, (2009). Fiscal Rules – Anchoring Expectations for Sustainable Public Finance. Discussion Paper approved by Carlo Cottarelli, December 19.Google Scholar
International Budget Partnership. (2010). www.internationalbudget.org/files/OBI2010-Chile.pdf, accessed on December 8, 2011.Google Scholar
Ilzetzki, E. and Vegh, C., (2008). Procyclical Fiscal Policy in Developing Countries: Truth or Fiction? NBER Working Papers No. 14191.Google Scholar
Kumhof, M. and Laxton, D., (2009). Chile’s Structural Fiscal Surplus Rule: A Model-Based Evaluation. IMF Working Paper No. 09/88.CrossRefGoogle Scholar
Larraín, F. and Parro, F., (2006). Chile menos volátil. Manuscript, Instituto de Economía, Pontificia Universidad Católica de Chile.Google Scholar
Levy, G., (2008). A Parliamentary Budget Officer for Canada. Canadian Parliamentary Review 39.Google Scholar
Lienert, I., (2010). Should Advanced Countries Adopt a Fiscal Responsibility Law? IMF Working Paper No. 10/254.Google Scholar
Marcel, M., (2010). La Regla de Balance Estructural en Chile: Diez Años, Diez Lecciones. Manuscript, Inter-American Development Bank.Google Scholar
Marcel, M., Tokman, M., Valdés, R. and Benavides, P., (2001). Balance Estructural del Gobierno Central, Metodología y Estimaciones Para Chile: 1987–2000. Serie de Estudios de Finanzas Públicas N°1, DIPRES.Google Scholar
Morsy, H., (2009). Current Account Determinants for Oil-Exporting Countries. IMF Working Paper No. 09/28, February.Google Scholar
Norwegian Ministry of Finance (2011). The National Budget 2012.Google Scholar
Norwegian Ministry of Finance (2010). The Management of the Government Pension Fund in 2010, Report No. 15 (2010–2011) to the Storting.Google Scholar
Norwegian Ministry of Finance (2010). The Structural Non-oil Budget Deficit, Memorandum.Google Scholar
Norwegian Ministry of Finance (2001). Guidelines for Economic Policy. Report No. 29 (2000–2001) to the Storting.Google Scholar
Norwegian Petroleum Directorate (2011). Petroleum Resources on the Norwegian Continental Shelf. Norwegian Petroleum Directorate, Oslo, Norway.Google Scholar
OECD, (2010). Economic Survey of Chile 2010: Fiscal Policies for Enhanced Resilience and Equity. OECD Economic Survey of Chile, Paris: OECD Press, chapter 2.Google Scholar
Rivlin, A. M., (2010). Helping Politicians Face Difficult Choice. Conference on “Independent Fiscal Institutions”. Budapest. March 18–19.Google Scholar
Rodríguez, J., Tokman, C. and Vega, A., (2006). Política de Balance Estructural: Resultados y Desafíos tras Seis Años de Aplicación en Chile. Estudios de Finanzas Públicas, DIPRES.Google Scholar
Rodríguez, J., Escobar, L. and Jorratt, M., (2009). Los Ingresos Tributarios en el Contexto de la Política de Balance Estructural. Estudios de Finanzas Públicas, DIPRES.Google Scholar
Salti, N., (2008). Oil Greasing the Wheels: When Do Natural Resources Become a Blessing? American University of Beirut Working Paper No. 439, September.Google Scholar
Schmidt-Hebbel, K. (2010). Fiscal Rules and Institutions in the World and in Chile. Manuscript, Catholic University of Chile.Google Scholar
Schmidt-Hebbel, K. (2011). Fiscal Policy for Commodity-Exporting Countries: Experience from Chile. Presented at the IMF Seminar on “Commodity Price Volatility and Inclusive Growth in LIC,” Washington, DC, September 21.Google Scholar
Selim, H. and Zaki, C.. This volume. The Institutional Curse of Natural Resources in the Arab World.Google Scholar
Sovereign Wealth Fund Institute, (2011). www.swfinstitute.org/statistics-research/linaburg-maduell-transpa-rency-index/ accessed December 8. 2010.Google Scholar
Sovereign Wealth Fund Institute, (2012). www.swfinstitute.org/fund-rankings/ accessed March 8, 2011.Google Scholar
Stein, E., Talvi, A. and Grisanti, A.. (1998). Institutional Arrangements and Fiscal Performance: The Latin American Experience. NBER Working Paper No. 6358.CrossRefGoogle Scholar
Suliman, K.M. This Volume. Understanding and Avoiding the Oil Curse in Sudan.Google Scholar
Ter-Minassian, T., (2010). Preconditions for a Successful Introduction of Structural Fiscal Balance-based Rules in Latin America and the Caribbean: A Framework Paper. Inter-American Development Bank, Discussion Paper No. IDB-DP-157.Google Scholar
Torvik, R., (2012). Transparency and Accountability in Resource Rich Countries. Presented at the ERF Conference on “Understanding and Avoiding the Resource Curse in the Arab World”, Kuwait, January 15–16.Google Scholar
Velasco, A., Arenas, A., Céspedes, L. and Rodríguez, J., (2007). Compromisos Fiscales y la Meta de Superávit Estructural. Estudios de Finanzas Públicas, DIPRES.Google Scholar
Velasco, A., Arenas, A., Rodríguez, J., Jorrat, M. and Gamboni, G., (2010). El Enfoque de Balanace Estructural en la Política Fiscal en Chile: Resultados, Metodología y Aplicación al Período 2006–2009. Estudios de Finanzas Públicas No 15.Google Scholar
Villafuerte, M. and López-Murphy, P., (2010). Fiscal Policy in Oil Producing Countries During the Recent Oil Price Cycle. IMF Working Paper No. 10/28, February.Google Scholar
Von Hagen, J., (2005). Political Economy of Fiscal Institutions. GESY Discussion Paper No. 149.Google Scholar
Wren-Lewis, S., (2010). Comparing the Delegation of Monetary and Fiscal Policy. Conference on “Independent Fiscal Institutions”. Budapest. March 18–19.Google Scholar

Save book to Kindle

To save this book to your Kindle, first ensure [email protected] is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

Available formats
×