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Policy responses to the COVID-19 pandemic: Another case of “resource curse”?

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  • Tsani, Stella
  • Koh, Wee Chian

Abstract

This paper examines the COVID-19 policy responses with focus on resource abundance and the role of policy tools, like oil-based Sovereign Wealth Funds, employed in resource-rich countries to support fiscal responses to the pandemic. Panel data on a sample of 217 countries for the period 2019–2020 are used. Quantile regression analysis is employed to obtain a nuanced understanding of the identified relationships which goes beyond mean links. Empirical results show that resource-rich countries, and hydrocarbon rich-countries in particular, record smaller fiscal responses to the pandemic as compared to resource-poor countries. This holds true even for countries that operate Sovereign Wealth Funds. Results are consistent under different model specifications, policy response measures (fiscal, on-budget), resource-abundance variables, whole- and sub-sample, at the mean and different quantile levels. The findings confirm another case of the “resource curse” manifested through weaker fiscal stimulus in resource-rich countries as compared to resource-poor countries. This calls for policy considerations in resource-rich countries to better prepare against future shocks and to carefully consider in this process the role of explicit policy tools they may employ.

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  • Tsani, Stella & Koh, Wee Chian, 2024. "Policy responses to the COVID-19 pandemic: Another case of “resource curse”?," Energy Policy, Elsevier, vol. 195(C).
    • Handle: RePEc:eee:enepol:v:195:y:2024:i:c:s030142152400394x
    DOI: 10.1016/j.enpol.2024.114374
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    More about this item

    Keywords

    Sovereign Wealth Fund; Resource curse; COVID-19; Policy response; Resource-rich countries; Fiscal policy;
    All these keywords.

    JEL classification:

    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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