Commodity Price Shocks and the Oddson Fiscal Performance
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Summary:
Unanticipated changes in commodity prices can generate significant movements in fiscal aggregates. This paper seeks to understand the dynamics of these fiscal movements in the context of transitory commodity price shocks using sample data from four CIS countries- two oil-producing and two non-oil commodity-intensive countries. It adopts a structural VAR approach and identifies the dynamic effects of commodity price shocks on fiscal performance under two broad tax regimes. Stochastic simulations indicate high probabilities of fiscal overperformance in the short term when commodity prices are high. These probabilities deteriorate significantly, however, in the long term after the transitory positive commodity price shock has dissipated, particularly when lax fiscal policy is adopted during the period of the price boom.
Series:
Working Paper No. 2005/171
Subject:
Commodity price fluctuations Commodity price indexes Commodity price shocks Commodity prices Expenditure Prices
English
Publication Date:
September 1, 2005
ISBN/ISSN:
9781451861907/1018-5941
Stock No:
WPIEA2005171
Pages:
35
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