We develop an analytical approach that offers insights into how governments can better manage an oil-revenue stabilization fund. The model maximizes the expected intertemporal utility of households and consists of decisions that are a function of the fund level and oil revenue. We apply our approach to Saudi data, noting that the government deposits and reserve at the Saudi Arabian Monetary Agency have historically served as a buffer to decouple the Saudi government budget from oil revenue fluctuations. Results from our model match intuition: the larger the fund, the smaller the additions during periods of high revenues and the bigger the withdrawals during periods of low revenues. We also show that the fund can be partitioned into tranches with different asset durations rather than being solely invested in short-term assets. Our results indicate that the boundary between an oil-revenue stabilization fund and a sovereign wealth fund is not a bright line.

Fellow
Nader AlKathiri is a fellow in the Energy Macro & Microeconomics program. He currently leads a project exploring how different…
Nader AlKathiri is a fellow in the Energy Macro & Microeconomics program. He currently leads a project exploring how different energy transition pathways impact the economies of developing and developed countries, aiming to enhance our understanding of the challenges and opportunities that lie ahead in achieving net-zero emissions. Nader’s research has been published in several international peer-reviewed journals such as Energy Economics, Resources Policy, and Applied Economics. Nader holds a Ph.D. in Economics from the University of Sussex and an M.Sc. in Applied Mathematics and Computational Sciences from KAUST. He also holds an MBA in Finance from Prince Sultan University and a B.Sc. degree in Operations Research from King Saud University.
Expertise
- Energy Economics; Economic Diversification; Macroeconomics; Development Economics; Energy Transition
Publications See all Nader AlKathiri’s publications
The impact of fiscal policy on non-oil GDP in Saudi Arabia
We develop an analytical approach that offers insights into how governments can better manage an…
9th September 2022
Labour Productivity Growth and Convergence in Manufacturing: A Nonparametric Production Frontier Approach
We develop an analytical approach that offers insights into how governments can better manage an…
1st September 2022