Oil Funds Research Articles

Sovereign wealth funds: dangers and opportunities

Soaring oil prices since the early 2000s have led to a historic transformation of wealth from consuming regions to major oil exporters. In recent years many of these exporters have set up oil funds to utilize their massive and growing oil revenues. These funds are divided into two categories—stabilizing and saving. Their large investments in western markets have raised concerns that they might be driven by political and strategic interests rather than commercial ones. This article examines oil funds in the Persian Gulf, Norway and Russia. It discusses US and European proposals to regulate oil funds' investments. The article examines the International Monetary Fund's efforts to forge a consensus on a ‘code of conduct’ that would guide the relationship between oil funds and the recipient markets. The analysis argues against excessive regulation.

The Role of Fiscal Institutions in Managing the Oil Revenue Boom

This paper examines the fiscal responses of oil-producing countries (OPCs) to the oil boom through 2005 and the role of special fiscal institutions (SFIs)—oil funds, fiscal rules and fiscal responsibility legislation (FRL), and budgetary oil prices—in fiscal management in OPCs, and draws some general lessons.

Looking Beyond the Fiscal: Do Oil Funds Bring Macreconomic Stability?

Oil funds have become increasingly popular in oil exporting countries during the recent surge in oil prices. However, the literature on the contribution is small, tends to focus narrowly on their fiscal benefits, and concludes that they are redundant of such funds-in other words, that well designed fiscal management and policy are adequate substitutes for oil funds. This paper argues that a broader focus is needed in judging the effectiveness of such funds. We test whether oil funds help reduce macroeconomic volatility. The econometric estimation results from a 30-year panel data set of 15 countries with and without oil funds suggest that oil funds are associated with reduced volatility of broad money and prices and lower inflation. However, there is a statistically weak negative association between the presence of an oil fund and volatility of the real exchange rate.

Looking Beyond the Fiscal: Do Oil Funds Bring Macroeconomic Stability?

Looking Beyond the Fiscal: Do Oil Funds Bring Macroeconomic Stability?

Overcoming the Curse of Hydrocarbon: Goals and Governance in the Oil Funds of Kazakhstan and Azerbaijan

This paper discusses the contribution that oil funds can make to the policy challenges facing resource-rich countries. To set the stage, it reviews the potential role of such funds in the broader context of macroeconomic and energy policies – taking into account uncertainty about oil prices, the impact of institutional costs, and problems of organisational design. The paper then highlights the critical role of governance issues in three respects: defining transparently the goals of each fund; communicating these goals to build a constituency of public support; and ensuring the efficient and transparent management of the fund on an ongoing basis. Two recent cases in the Caspian Sea region are then discussed: Azerbaijan and Kazakhstan. In both instances, the paper highlights issues of coordination and efficiency in the investment policies of the funds. While there are attempts to monitor their transparency through public awareness and websites, the author believes that this in itself is no substitute for a comprehensive governance strategy. Moreover, improved transparency can help inform the debate about strategic issues concerning the goals for such funds, and their contribution to the country's development strategy.

Practice and Application of Oil Funds: Azerbaijan and Kazakhstan as Case Studies in Addressing the Dutch Disease

This is a study of the issues of economic growth, structural changes, and wealth management in oil-rich transition economies with reference to the cases of Azerbaijan and Kazakhstan. The main research rationale is to analyze the potential consequences of wealth, such as the Dutch Disease and to show the role of oil funds in preventing uneven economic development in a resource-rich country with implications for policymakers of the two countries. The main goal behind establishing such funds is to keep natural resource revenues separate from other state revenues in order to neutralize the effects of high income inflows on real exchange rates, exports and non-resource sectors of the economy, and/or to ensure intergenerational equity. Although both Azerbaijan and Kazakhstan have established oil funds to avoid the potential dangers of the paradox of plenty, there still remains a lot to be done to accomplish this objective.

The Net Worth Approach to Fiscal Analysis: Dynamics and Rules

The net worth approach to fiscal analysis is cast in a simple model able to capture the dynamics and steady-state equilibria of public sector's debt, nonfinancial and financial assets, and net worth under alternative fiscal rules, including the golden rule and the golden rule cum debt stabilization fund. The paper also presents an adaptation of the model to the case of economies with depletable resources that have introduced investment oil funds, and illustrates the fiscal conditions required for the solvency of the associated fiscal rules. The model brings to the forefront the rate of return of public assets, highlighting the need for policymakers to decide on the appropriate level of assets and debt ratios. Finally, the model's potential for use in a range of contexts is demonstrated with a simple numerical simulation.

An economic Manifesto for the oil exporting countries of the Persian Gulf

The oil-exporting countries of the Persian Gulf have failed economically and socially. It is time for a radical new approach to managing oil revenues while oil and gas reserves last. We propose an approach to cut the level of oil revenues available to governments to zero while incorporating a formal "Oil Fund for All Generations". Others have proposed and implemented oil funds but in our proposal the government would (in time) lose all access to oil revenues; by taking easy money away from governments and rulers, waste, corruption, military expenditures and wars will be reduced, there will be better chance of adopting and implementing rational economic policies, and equity across generations may be enhanced. Hope may be slowly restored to a region that has lost hope. JEL Codes: O11, O13, O53, Q32, Q33 Keywords: oil

Review of the Experience with Oil Stabilization and Savings Funds in Selected Countries

The main purposes of this paper are to review the operational modalities and experience of oil funds currently in place in Norway, Chile (copper), the State of Alaska, Venezuela, Kuwait, and Oman, and to draw some preliminary conclusions on their contribution to enhance fiscal management. The outcome so far of their experience has been mixed, with differences among countries reflecting the variety of objectives attached to the funds, the challenges in adhering to established rules, the institutional set-up. and the soundness of the overall fiscal discipline in each country (or state).

Review of the Experience with Oil Stabilization and Savings Funds in Selected Countries

The main purposes of this paper are to review the operational modalities and experience of oil funds currently in place in Norway, Chile (copper), the State of Alaska, Venezuela, Kuwait, and Oman, and to draw some preliminary conclusions on their contribution to enhance fiscal management. The outcome so far of their experience has been mixed, with differences among countries reflecting the variety of objectives attached to the funds, the challenges in adhering to established rules, the institutional set-up, and the soundness of the overall fiscal discipline in each country (or state).

UT Southwestern: From Army Shacks to Research Elites

Dallas—A mix of oil funds, state money, and private philanthropy has turned the University of Texas Southwestern Medical School into a research power. Its scientific strength rests on a combination of homegrown talent and superstars lured from other institutions with promises of ample research resources and the prospect of interdisciplinary studies.

AZƏRBAYCANIN NEFT STRATEGİYASININ REGİONAL NƏQLİYYAT MARŞRUTLARININ REALLAŞDIRILMASINA TƏSİRİ

Since 1994, Azerbaijan's oil strategy has been to export Caspian energy resources to European markets via a variety of ways, ensuring Azerbaijan's involvement in European energy security as well as national security and direct profits from natural resource sales to non-oil sectors. This policy has guaranteed that Azerbaijan's interests are taken into consideration in regional projects, including the definition of transportation corridors, thanks to its successful implementation. As a result, Azerbaijan's oil strategy has had a significant impact on the country's economic structural changes by encouraging the country's economic integration with regional and global enterprises. Azerbaijan is currently attempting to generate non-oil revenues by utilizing oil funds to construct regional transportation corridors and establish itself as a logistics hub. Increasing the capacity of the Caspian transport corridor increases Azerbaijan's economic ties to the rest of the world. The study's goal is to look at the impact of Azerbaijan's oil policy on the execution of regional transportation routes, as well as the benefits it brings to the country. Analyses published in major scientific journals as the main research methodologies were taken into account and generalized for this goal.

The ımpact of azerbaıjan's oıl strategy on regıonal transport routes

Since 1994, Azerbaijan's oil strategy has been to export Caspian energy resources to European markets via a variety of ways, ensuring Azerbaijan's involvement in European energy security as well as national security and direct profits from natural resource sales to non-oil sectors. This policy has guaranteed that Azerbaijans interests are taken into consideration in regional projects, including the definition of transportation corridors, thanks to its successful implementation. As a result, Azerbaijan's oil strategy has had a significant impact on the country's economic structural changes by encouraging the country's economic integration with regional and global enterprises. Azerbaijan is currently attempting to generate non-oil revenues by utilizing oil funds to construct regional transportation corridors and establish itself as a logistics hub. Increasing the capacity of the Caspian transport corridor increases Azerbaijans economic ties to the rest of the world. The study's goal is to look at the impact of Azerbaijans oil policy on the execution of regional transportation routes, as well as the benefits it brings to the country. Analyses published in major scientific journals as the main research methodologies were taken into account and generalized for this goal.

Euro-currency market as recycling medium

During the past year the Euro-currency market played a very large role in bridging over the oil-induced payments imbalances. In the interest of international monetary stability this market should now move somewhat away from the centre of the stage and leave the main responsibility for the recycling of oil funds to the official financing mechanisms.