Optimal fiscal management of commodity price shocks

• Published in: Journal of development economics Vol. 122; pp. 183 - 196
• Main Author: Agenor, Pierre-Richard
• Format: Journal Article
• Language: English
• Published: Amsterdam Elsevier B.V 01.09.2016; Elsevier Sequoia S.A
• Subjects: Capital market; Capital markets; Commodity price shocks; Commodity prices; Developing countries; Distribution costs; Externalities; Externality; Fiscal policy; LDCs; Macroeconomics; Open-economy DSGE models; Optimal resource windfall allocation; Public infrastructure; Sovereign funds; Studies; Sovereign funds; F41; H41; Optimal resource windfall allocation; Public infrastructure; H54; Commodity price shocks; Open-economy DSGE models

This paper analyzes how low-income countries should optimally respond, through fiscal policy, to commodity price shocks. The model accounts for imperfect access to world capital markets and a variety of externalities associated with public infrastructure, including utility benefits, a direct complem...