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The Basilicata Wealth Fund: resource policy and long-run economic development in Southern Italy

Iacono, Roberto and Viccaro, Mauro (2016): The Basilicata Wealth Fund: resource policy and long-run economic development in Southern Italy.

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Abstract

This paper posits a novel resource policy for the resource-rich southern Italian region of Basilicata. The policy consists of establishing a regionally owned wealth fund (the Basilicata Wealth Fund), in which royalty revenues from natural resources in Basilicata can be stored as low-risk financial assets. The paper pins down and simulates the dynamics of different fiscal expenditure rules. The Basilicata Wealth Fund strengthens long-run economic development and fosters higher accountability, hence avoiding misuse of resource revenues for myopic fiscal spending. The Basilicata Wealth Fund constitutes a novel approach that can be followed by other resource-rich regions.

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