Fiscal Policy in Nigeria: Any Role for Rules?

37 Pages Posted: 28 Jan 2006

Date Written: July 2003

Abstract

Fiscal policy in oil-producing countries can be profoundly affected by oil revenue uncertainty and volatility. Policy formulation should factor in the exhaustibility of the natural resources and aim at reducing oil revenue volatility passed on to the economy. Past fiscal policy in Nigeria has not been successful in this regard, since both revenue and expenditure have been highly volatile, to a large extent reflecting oil price developments. The paper discusses the role an appropriately designed fiscal rule, nested within the long-run sustainable use of oil revenue, could have in providing a more stable framework for fiscal policy formulation. It also highlights practical implementation and transitional issues.

Keywords: fiscal policy rules, oil-producing countries, nonrenewable resources, Nigeria

JEL Classification: E62, Q32, Q38, H61

Suggested Citation

Baunsgaard, Thomas, Fiscal Policy in Nigeria: Any Role for Rules? (July 2003). Available at SSRN: https://ssrn.com/abstract=879231 or http://dx.doi.org/10.2139/ssrn.879231

Thomas Baunsgaard (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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