Nonrenewable Resources: A Case for Persistent Fiscal Surpluses
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Summary:
This paper examines whether there is a case for temporary but persistent fiscal surpluses in economies heavily endowed with nonrenewable resources. It finds that there generally is a case. Fiscal surpluses permit replacing nonfinancial wealth with financial assets, the return on which increases public consumption possibilities of future generations for a constant across-generation tax burden. The more biased are a government’s preferences toward present generations, the lower will be the initial surpluses; the larger the finite endowment, the larger the initial surpluses. In a more general framework, including public investment, the proposition could be rephrased by replacing surpluses with stronger initial fiscal positions.
Series:
Working Paper No. 1999/044
Subject:
Environment Expenditure Fiscal policy Fiscal stance Non-renewable resources Tax incidence Tax policy
English
Publication Date:
March 1, 1999
ISBN/ISSN:
9781451846393/1018-5941
Stock No:
WPIEA0441999
Pages:
29
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