Generate QR code
Open Access
Subscription Access
Oil supercycle and fiscal policy
https://doi.org/10.32609/0042-8736-2015-9-5-30
Abstract
Long-term trends in oil price are discussed in the article. We find out that both short- and long-term projections mainly extrapolate into the future current developments in hydrocarbon prices. Meanwhile both historical data and analysis of fundamental economic mechanisms reveal supercycles - price waves with large amplitude and length amounting to several decades. Implications for fiscal policy from oil price swings are considered. We demonstrate in particular that these swings ensure high returns on the oil fund operations due to substantial gap between exchange rates at the periods of fund replenishment and withdrawal. This makes the oil Reserve fund mechanism by far more profitable for the government than other potential investment tools.
About the Authors
E. Gurvich
Economic Expert Group (Moscow, Russia)
Russian Federation
Russian Federation
I. Belyakov
Economic Expert Group (Moscow, Russia); Financial Research Institute (Moscow, Russia)
Russian Federation
Russian Federation
I. Prilepskiy
Economic Expert Group (Moscow, Russia)
Russian Federation
Russian Federation
References
1. Balaev A., Gurvich E., Prilepskiy I., Suslina A. (2014). The effect of oil prices and exchange rate on fiscal revenues. Finansovyi Zhurnal, No. 1, pp. 5—17. (In Russian).
2. Buklemishev O. (2013). Fiscal stimulus and Russian sovereign funds. Voprosy Ekonomiki, No. 12, pp. 74—85. (In Russian).
3. Gurvich E. (2006). How accurate are macroeconomic and fiscal forecasts? Voprosy Ekonomiki, No. 9, pp. 4—20. (In Russian).
4. Dmitrieva O. (2013). Deformatiom of fiscal policy and debt management as a result of the stabilization fund forming. Voprosy Ekonomiki, No. 3, pp. 20—32. (In Russian).
5. Ahrens W., Sharma V. (1997). Trends in natural resource commodity prices: Deterministic or stochastic? Journal of Environmental Economics and Management, Vol. 33, No. 1, pp. 59-74.
6. Alquist R., Kilian L., Vigfusson R. (2011). Forecasting the price of oil. Board of Governors of the Federal Reserve System. International Finance Discussion Papers, No. 1022.
7. Arezki R., Loungani P., van der Ploeg R., Venables T. (2014). Understanding international commodity price fluctuations. Journal of International Money and Finance, Vol. 42, April, pp. 1-8.
8. A.T. Kearny (2015). Beware the oil price super cycle. Caceres C., Medina L. (2012). Measures of fiscal risk in hydrocarbon-exporting countries. IMF Working Paper, No. 260.
9. Cashin P., McDermott C. J. (2002). The long-run behavior of commodity prices: Small trends and big variability. IMF Staff Papers, Vol. 49, No. 2, pp. 175-199.
10. Cavalcanti T., Mohaddes K., Raissi M. (2014). Commodity price volatility and the sources of growth. Journal of Applied Econometrics, published online September 9. DOI: 10.1002/jae.2407.
11. Christiano L., Fitzgerald T. (2003). The band pass filter. International Economic Review, Vol. 44, No. 2, pp. 435-465.
12. Dvir E., Rogoff K.S. (2009). Three epochs of oil. NBER Working Paper, No. 14927.
13. Erten B., Ocampo J. (2013). Super cycles of commodity prices since the mid-nineteenth century. World Development, Vol. 44, pp. 14-30.
14. Fatás A., Mihov I. (2008). Fiscal discipline, volatility and growth. In: T. Irwin, G. Perry, L. Servén, R. Suescún (eds.). Prudence or abstinence? Fiscal policy, stabilization, and growth. Washington, DC: World Bank, pp. 43-74.
15. Ghoshray A., Johnson B. (2010). Trends in world energy prices. Energy Economics, Vol. 32, pp. 1147-1156.
16. Habib M., Kalamova M. (2007). Are there oil currencies? The real exchange rate of oil exporting countries. ECB Working Paper, No. 839.
17. Hadri K. (2010). What can we learn from primary commodity prices series which is useful to policymakers in resource-rich countries? Queen’s University Belfast Working Paper Series, No. 1.
18. Herve A., Benoist A. (2010). Oil prices and government bond risk premiums. Lahore Journal of Business, Vol. 1, No. 1, pp. 1-21.
19. Husain A., Tazhibayeva K., Ter-Martirosyan A. (2008). Fiscal policy and economic cycles in oil-exporting countries. IMF Working Paper, No. WP/08/253.
20. IMF (2015). World economic outlook. April. Jacks D. S. (2013). From boom to bust: A typology of real commodity prices in the long run. NBER Working Paper, No. 18874.
21. Kesicki F. (2010). The third oil price surge - What’s different this time? Energy Policy, Vol. 38, No. 3, pp. 1596-1606.
22. Kilian L. (2009). Not all oil price shocks are alike: Disentangling demand and supply shocks in the crude oil market. American Economic Review, Vol. 99, No. 3, pp. 1053-1069.
23. Korhonen I., Juurikkala T. (2009). Equilibrium exchange rates in oil-exporting countries. Journal of Economics and Finance, Vol. 33, No. 1, pp. 71-79.
24. Krichene N. (2008). Crude oil prices: Trends and forecast. IMF Working Paper, No. 08/133.
25. Smith J. (2008). Organization of the Petroleum Exporting Countries (OPEC). In: S. N. Durlauf, L. E. Blume (eds.). New Palgrave dictionary of economics, 2nd ed. Londres: Palgrave Macmillan.
26. Story L. (2008). An oracle of oil predicts $200-a-barrel crude. New York Times, May 21.
27. Zaklan A., Abrell J., Neumann A. (2011). Stationarity changes in long-run fossil resource prices. DIW Berlin Discussion Papers, No. 1152.
28. Zellou A., Cuddington J. (2012). Trends and super cycles in crude oil and coal prices. Colorado School of Mines Working Paper, No. 2012-10.
Review
For citations:
Gurvich E., Belyakov I., Prilepskiy I. Oil supercycle and fiscal policy. Voprosy Ekonomiki. 2015;(9):5-30. (In Russ.) https://doi.org/10.32609/0042-8736-2015-9-5-30
Views:
980
Email this article 
