Current Account and Precautionary Savings for Exporters of Exhaustible Resources
By Rudolfs Bems, I. E. C. Filho. Social Science Research Network, 2009
113 citations recorded by the source corpus.
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.
View Paper: https://www.semanticscholar.org/paper/e5f54ce9e7c0389d99852f275f7ce37ff6dc2368
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Citations in the corpus
- The Impact of the Fracking Boom on Arab Oil Producers (2016, background): “Instead, the Saudi government has dealt with the decline in its oil revenue mainly by tapping its financial reserves, as predicted by standard models of precautionary savings (see, e.g., Bems and de Carvalho Filho 2011).”