Can Sovereign Wealth Funds Mitigate the Negative Impact of Volatility? - Economic Research Forum (ERF)

Can Sovereign Wealth Funds Mitigate the Negative Impact of Volatility?

Kamiar Mohaddes and Mehdi Raissi


Date:
March, 2018

NO.
31

Length:
5 pages

Topic:
E. Macroeconomics and Monetary Economics

In a nutshell

  • Commodity price volatility harms economic growth of natural resource dependent countries, which tends to result in disappointing long-term economic performance for these countries.
  • These negative effects operate through lower accumulation of physical capital and lower TFP.
  • Having a Sovereign Wealth Fund can mitigate such negative growth effects, especially in countries that enjoy higher-quality institutions (and hence less pro-cyclical fiscal policies).
  • Our results have strong policy implications, including better management of volatility in resource income by setting up forward-looking institutions, and improvements in macroeconomic policy frameworks.
Research Fellows

Kamiar Mohaddes

Faculty of Economics & Girton College, University of Cambridge


Mehdi Raissi


Project

EVENTS

There are no Events PAST



Related Publications

Policy Briefs

Currency-Plus-Commodity Basket: A Proposal for a New Exchange Rate Arrangement for Gulf Oil-Exporting Countries

Jeffrey A. Frankel

In a nutshell • Oil-exporting countries have experienced huge swings in the dollar price of oil ... read more


Policy Briefs

Egypt Must Strengthen Budget Institutions to Curb Mounting Budget Deficit

Mohamed Zaky

In a nutshell • Since the January 2011 popular revolution, the budget deficit in Egypt has ... read more