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Managing Revenue Volatility in a Small Island Economy: The Case of Kiribati

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  • Miss Catriona Purfield

Abstract

The formulation of fiscal policy in Kiribati faces unusual challenges. Kiribati's revenue base is among the most volatile in the world, and it possesses sizeable financial assets. Drawing on lessons from some other countries who experience high volatility in their revenues, this paper proposes a fiscal policy rule for Kiribati which is nested within a medium-term macroeconomic framework that aims to ensure the sustainable use of Kiribati's financial assets while managing the impact of extreme revenue volatility. It also discusses improvements in the institutional fiscal policy framework that could support such a framework.

Suggested Citation

  • Miss Catriona Purfield, 2005. "Managing Revenue Volatility in a Small Island Economy: The Case of Kiribati," IMF Working Papers 2005/154, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2005/154
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    References listed on IDEAS

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    1. Alberto Alesina & Roberto Perotti, 1995. "Fiscal Expansions and Fiscal Adjustments in OECD Countries," NBER Working Papers 5214, National Bureau of Economic Research, Inc.
    2. Ernesto Talvi & Carlos A. Vegh, 2000. "Tax Base Variability and Procyclical Fiscal Policy," NBER Working Papers 7499, National Bureau of Economic Research, Inc.
    3. Giavazzi, Francesco & Jappelli, Tullio & Pagano, Marco, 2000. "Searching for non-linear effects of fiscal policy: Evidence from industrial and developing countries," European Economic Review, Elsevier, vol. 44(7), pages 1259-1289, June.
    4. Schuknecht, Ludger & Tanzi, Vito, 2005. "Reforming public expenditure in industrialised countries: are there trade-offs?," Working Paper Series 435, European Central Bank.
    5. Mr. George Kopits & Mr. Steven A. Symansky, 1998. "Fiscal Policy Rules," IMF Occasional Papers 1998/011, International Monetary Fund.
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    Cited by:

    1. World Bank Group & New Zealand Ministry of Foreign Affairs and Trade & Australian Department of Foreign Affairs and Trade & Overseas Development Institute, 2016. "Strengthening Public Financial Management Reform in Pacific Island Countries," World Bank Publications - Reports 25070, The World Bank Group.
    2. International Monetary Fund, 2006. "Kingdom of the Netherlands—Netherlands: Selected Issues," IMF Staff Country Reports 2006/284, International Monetary Fund.
    3. Mr. Paulo A Medas & Mr. Eric Le Borgne, 2007. "Sovereign Wealth Funds in the Pacific Island Countries: Macro-Fiscal Linkages," IMF Working Papers 2007/297, International Monetary Fund.

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