Friday, February 25, 2011

The current account behavior of oil exporters

My paper - with Rudolfs Bems - on precautionary savings and the current account behavior of exporters of exhaustible resources was accepted yesterday for the Journal of International Economics.

The Current Account and Precautionary Savings for Exporters of Exhaustible Resources (with Rudolfs Bems).
2009. IMF Working Paper 09/33 (that is the updated version, presented at Oxford Centre for the Analysis of Resource Rich Economies 4th Annual Conference, September 15-16 2010). The final version, available upon request, is forthcoming at the Journal of International Economics.  
Exporters of exhaustible resources have historically exhibited higher income volatility than other economies, suggesting a heightened role for precautionary savings. This paper uses a parameterized small open economy model to quantify the role of precautionary savings in economies with exhaustible resources, when the only source of uncertainty is the price of the exhaustible resource. Results show that the precautionary motive can generate sizable external sector savings. When aggregated over the sample countries, precautionary savings in 2006 add up to 3.2 percent of GDP. The quantitative importance of the precautionary motive varies considerably across the sample countries and is driven primarily by the weight of exhaustible resource revenues in future income. The parameterized model fares well at capturing current account balances in both cross-section and time-series data.

No comments:

Post a Comment