Abstract

Oil revenue stabilization funds provide short-run protection against oil revenue fluctuations – in the way that Saudi government deposits and reserve at the Saudi Arabian Monetary Authority (SAMA) have historically served as a buffer to decouple government budget from oil revenue fluctuations. By contrast, sovereign wealth funds create income for future generations to replace revenue streams from depletable resources – one of the purposes of Saudi Arabia’s Public Investment Fund. We developed a framework for optimizing policies for adding to and withdrawing from stabilization funds, which we apply to Saudi Arabia as a case study based on publicly available data. The quantitative results are sensitive to the specific assumptions on the likelihood of particular oil prices arising but the overall results are robust to a wide range of assumptions.

Authors

Nader AlKathiri

Nader AlKathiri

Senior Research Associate Nader is a senior research associate whose research interests include natural resource economics and economic modeling. His current study focuses on the…

Expertise

  • Sovereign wealth funds; natural resource economics; economic modeling

Publications See all Nader AlKathiri’s publications

Restructuring Saudi Arabia’s Power Generation Sector: Model-Based Insights

Restructuring Saudi Arabia’s Power Generation Sector: Model-Based Insights

Oil revenue stabilization funds provide short-run protection against oil revenue fluctuations – in the way…

December 20, 2017
Managing Oil Revenue Stabilization Funds: A Framework for Developing Policies

Managing Oil Revenue Stabilization Funds: A Framework for Developing Policies

Oil revenue stabilization funds provide short-run protection against oil revenue fluctuations – in the way…

October 4, 2017
Frederic Murphy

Frederic Murphy

Visiting Researcher Frederic is professor emeritus, Fox School of Business, Temple University, where he taught for 30 years. He is currently a…

Expertise

  • Energy markets
  • energy regulation
  • computing economic equilibria

Publications See all Frederic Murphy’s publications

The Costs and Gains of Coordinating Electricity Generation in the Gulf Cooperation Council Utilizing the Interconnector

The Costs and Gains of Coordinating Electricity Generation in the Gulf Cooperation Council Utilizing the Interconnector

Oil revenue stabilization funds provide short-run protection against oil revenue fluctuations – in the way…

June 10, 2018
The Economic Impact of Price Controls on China’s Natural Gas Supply Chain

The Economic Impact of Price Controls on China’s Natural Gas Supply Chain

Oil revenue stabilization funds provide short-run protection against oil revenue fluctuations – in the way…

May 24, 2018
Axel Pierru

Axel Pierru

Interim Vice President of Research Axel is the interim vice president of research at KAPSARC. He also leads the Energy and Macroeconomics program and has…

Expertise

  • Energy modelling
  • energy economics
  • energy policy
  • oil pricing and finance

Publications See all Axel Pierru’s publications

Estimating the Household Consumption Function in Saudi Arabia

Estimating the Household Consumption Function in Saudi Arabia

Oil revenue stabilization funds provide short-run protection against oil revenue fluctuations – in the way…

February 5, 2019
The Costs and Gains of Coordinating Electricity Generation in the Gulf Cooperation Council Utilizing the Interconnector

The Costs and Gains of Coordinating Electricity Generation in the Gulf Cooperation Council Utilizing the Interconnector

Oil revenue stabilization funds provide short-run protection against oil revenue fluctuations – in the way…

June 10, 2018
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