The Basilicata Wealth Fund

Abstract

This paper introduces a novel resource policy for the resource-rich southern Italian region of Basilicata. This policy consists of establishing a regionally-owned wealth fund (labeled for simplicity as the Basilicata Wealth Fund), according to which royalty revenues from natural resources in Basilicata can be stored as lowrisk financial assets in order to sustain future regional expenditures. The paper pins down and simulates the dynamics of a set of fiscal expenditure rules. The Basilicata Wealth Fund fosters transparency accountability as regards fiscal spending, hence avoiding misuse of resource revenues.