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Rent Absorption in the T&T Economy

In: Oil and Gas in Trinidad and Tobago

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  • Roger Hosein

    (The University of the West Indies)

Abstract

This chapter discusses the economic merit of various modifications to the HSF program in T&T. It outlines the relationship between consumption and investment in a small oil-based economy with elaboration on the Permanent Income Hypothesis (PIH), the Bird in Hand (BIH), the optimal strategy (Dop), and the Hand to Mouth (resource curse strategy). The chapter also suggests ways to improve the Heritage and Stabilization Fund (HSF) and minimize the adverse impact of rents subsidies with reference to the “Make Work Program” and the “GATE” program. The chapter concludes that the HSF has to be strengthened so that even at very low oil and gas prices, this country saves part of its energy revenues, if not all. The Hand to Mouth strategy of consuming all of the energy revenues simply cannot work and indeed it has placed the country in a very uncomfortable position of having no economic growth since 2008 although the country produced 4 bn barrels of oil and gas equivalent and now has to straddle a huge debt of TT$135 bn.

Suggested Citation

  • Roger Hosein, 2021. "Rent Absorption in the T&T Economy," Springer Books, in: Oil and Gas in Trinidad and Tobago, chapter 0, pages 157-192, Springer.
    • Handle: RePEc:spr:sprchp:978-3-030-77669-5_9
    DOI: 10.1007/978-3-030-77669-5_9
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