Are Diamonds Forever? Using the Permanent Income Hypothesis to Analyze Botswana's Reliance on Diamond Revenue
15 Pages Posted: 2 Apr 2008
Date Written: March 2008
Abstract
This study assesses the sustainability of Botswana's diamond-related fiscal revenue. Diamond reserves are not adequate to generate enough permanent revenue to sustain a high level of expenditure. Under the current fiscal rule that no debt may be accumulated, Botswana will have to save more to avoid an abrupt adjustment in the medium term.
Keywords: Botswana, permanent income hypothesis, diamond-related fiscal revenue
JEL Classification: E62, O11, Q32
Suggested Citation: Suggested Citation
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