How Much Is Enough? Monte Carlo Simulations of an Oil Stabilization Fund for Nigeria / Ulrich Bartsch.

Format:

Book

Government document

Author/Creator:

Bartsch, Ulrich.

Series:

IMF Working Papers; Working Paper ; No. 2006/142

IMF Working Papers

Language:

English

Subjects (All):

Petroleum products--Prices--Nigeria.

Petroleum products.

Petroleum industry and trade--Nigeria--Finance.

Petroleum industry and trade.

Physical Description:

1 online resource (19 p.)

Edition:

1st ed.

Place of Publication:

Washington, D.C. : International Monetary Fund, 2006.

Language Note:

English

Summary:

In oil-dependent countries, a major issue is how to stabilize fiscal spending when government revenue fluctuates along with the international price of oil. A stabilization fund would allow the government to pull through an oil price trough and absorb windfall revenue when prices are high. This paper focuses on two key issues. First, the paper proposes to base government spending on moving averages of past oil prices that are shown to behave nearly as a random walk. Second, it uses Monte Carlo simulations of a fiscal policy model to look at the probability that a given level of assets in the stabilization fund is exhausted over a certain number of years. The simulations show that with a fiscal policy based on moving averages over three to five years, a stabilization fund of about 75 percent of 2004 oil revenue would be adequate, which, in Nigeria, would equate to US$16-18 billion.

Contents:

""Contents""; ""I. AN OIL STABILIZATION FUND FOR NIGERIA""; ""A. Introduction and Overview""; ""B. Views in the Literature""; ""C. Stabilizing Fiscal Spending""; ""D. Model Description""; ""E. Application to Nigeria""; ""References""

Notes:

"June 2006."

Includes bibliographical references.

Description based on print version record.

ISBN:

9786613829658

9781462353842

1462353843

9781452716848

1452716846

9781283517201

1283517205

9781452701400

1452701407

OCLC:

694141267