Fiscal Policy in Oil Producing Countries During the Recent Oil Price Cycle
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Summary:
This paper presents a detailed analysis of the average fiscal policy responses of oil producing countries (OPCs) to the recent oil price cycle. We find that OPCs worsened their non-oil primary balances substantially during 2003-2008 driven by an increase in primary spending. However, this trend was partially reversed when oil prices went down in 2009. We also find evidence that fiscal policy has been procyclical and has hence exacerbated the fluctuations in economic activity. In addition, we estimate that a small reduction in oil prices could lead to very large financing needs in the near future. Finally, we show that long-term fiscal sustainability positions in OPCs have worsened.
Series:
Working Paper No. 2010/028
Subject:
Fiscal policy Fiscal stance National accounts Oil prices Oil, gas and mining taxes Personal income Prices Taxes
English
Publication Date:
February 1, 2010
ISBN/ISSN:
9781451962536/1018-5941
Stock No:
WPIEA2010028
Pages:
24
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