Purpose Resource-dependent economies face critical policy challenges in sustainable intergenerational wealth management. The GCC countries exemplify this imperative, with 3–4 trillion in accumulated sovereign wealth funds. This paper extends established permanent-income and Hartwick-type models to incorporate GCC-specific institutional features. Design/methodology/approach We develop a stochastic optimal control framework integrating the Hartwick Rule with permanent-income theory, adapted to GCC economies. Five institutional specifications quantify impacts: (1) infrastructure productivity spillovers, (2) labor remittance treatment, (3) government budget constraints, (4) non-oil revenue disaggregation and (5) trade dynamics with real exchange rate effects. Findings Model modifications produce substantive intermediate impacts: infrastructure spillovers generate +200 billion non-oil GDP improvement, remittance treatment reveals +20–30 billion annual fiscal capacity enhancement, budget constraints validate policy feasibility through 50% price declines, revenue disaggregation demonstrates 79–110 billion resilience under severe shocks, and trade dynamics require +10 billion infrastructure response. While optimal consumption policy remains at 150 billion annually across specifications, the model demonstrates that institutional modifications significantly affect how wealth is generated and allocated across investment categories. Oil price uncertainty affects the range of feasible outcomes and the robustness of results, but not the fundamental form of optimal consumption and investment rules. Originality/value The applied framework demonstrates that GCC policy recommendations rest on permanent-income and Hartwick principles, with results robust to institutional variations. The analysis provides a practical tool for fiscal planning and sovereign wealth fund management in resource-rich economies facing commodity price volatility.
Alhitmi et al. (Tue,) studied this question.