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Title: Fiscal policy decisions in oil producing countries
Author: Azhgaliyeva, Dina
Awarding Body: University of Essex
Current Institution: University of Essex
Date of Award: 2013
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This thesis comprises theoretical and empirical models. In the first theoretical model, it is shown that the effect of taxes on oil production and exploration depends on how oil price rises relative to the interest rate. In the first empirical model, it is found that taxes on oil have negative effect on oil production and an oil revenue fund in Kazakhstan stabilized the government expenditure, but did not stabilize real effective exchange rates. In the second theoretical and empirical models, it is found that existence of a fund can stabilize exchange rates. Additionally, in the theoretical model, it is found that funds that follow the expenditure-based accumulation rule can stabilize exchange rates better than funds that follow the revenue-based accumulation rule. However , in the empirical model it is found that funds that follow the revenue-based accumulation rule can stabilize real effective exchange rates better than funds that follow the expenditure-based accumulation rule. In. the third theoretical model, the optimal rules for oil revenue funds that maximize intergenerational social welfare are derived under oil income certainty. ID addition, the theoretical model provides the optimal withdrawal rule for oil revenue funds after the oil is exhausted. Numerical simulations show that funds can improve intergenerational social welfare, though not always. Which rule yields the highest intergenerational social welfare depends on countries' parameters such as gross interest rate, relative risk aversion and growth rate of oil production. Some rules may be unaffordable for a government budget. If oil production does not decline, funds following expenditure-based accumulation rules yield higher social welfare than funds that follow other rules. If oil production declines, the Permanent Oil income model or "Bird-in-Hand" can yield the highest social welfare
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available