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TitleA sustainable fiscal rule to manage non-renewable resource revenues: Oil sands as a second chance for Alberta
Publication TypeThesis
Year of Publication2008
AuthorsKendall, L. M.
Pagination85 pages
Date Published09/2008
PublisherUniversity of Calgary Department of Economics
Place PublishedCalgary, AB
Publication Languageeng
Keywordseconomics, legislation, model, modeling, policy, UofC

In this thesis, I examine an optimal fiscal policy for how a government, which has access to non-renewable resource revenues, is able to satisfy issues of intergenerational equity and fiscal sustainability. The optimal fiscal rule restricts the choices available to the government by requiring that it contribute to an oil fund. Within this fiscal rule, the government must follow an appropriate set of behaviours with respect to borrowing, saving and financial liability retirement; behaviours which vary over time as exploitation of the non-renewable resources move through three phases of development. I, then, apply this fiscal policy rule to the Alberta government, taking into account its current fiscal stance and the nature of the oil industry, which is a mix of light crude and the oil sands. I suggest that the Alberta government apply this optimal fiscal policy to manage the non-renewable resource revenues to achieve fiscal sustainability, while at the same time having a richer public sector.

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