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Fiscal rules and the management of natural resource revenues: the case of Chile

Céspedes, Luis Felipe, Parrado, Eric and Velasco Branes, Andres (2014) Fiscal rules and the management of natural resource revenues: the case of Chile. Annual Review of Resource Economics, 6 (1). pp. 105-132. ISSN 1941-1340

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Identification Number: 10.1146/annurev-resource-100913-012856

Abstract

Over the past quarter-century, Chile has proven that the unthinkable is possible: A middle-income, natural resource-producing nation can have a fiscal policy that is both stable and sustainable. The core of this policy has been very simple: Act responsibly, design policy for the long run, and accumulate enough fiscal space so that fiscal policy can play a stabilizing role in the short run. The approach implies saving during periods of high copper prices and using those accumulated resources during a global economic crisis. Shifting from a procyclical to a mildly countercyclical fiscal stance has helped to smooth public investment and social expenditures across the cycle. One example of this countercyclical policy was Chile's reaction to the 2008-2009 world financial crisis. Thus, this article argues that Chile's approach contains ideas and practices that may be useful in the design of fiscal policies and institutions in other commodity-producing nations.

Item Type: Article
Additional Information: © 2014 The Author
Divisions: School of Public Policy
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Subjects: H Social Sciences > HG Finance
JEL classification: E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy Formation, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E62 - Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation
H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents > H30 - General
H - Public Economics > H6 - National Budget, Deficit, and Debt > H60 - General
Date Deposited: 10 Oct 2019 14:54
Last Modified: 20 Oct 2019 03:10
URI: http://eprints.lse.ac.uk/id/eprint/102049

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